Nasdaq's board diversity disclosure rule was vacated and is no longer in force
The US Court of Appeals for the Fifth Circuit vacated the SEC's approval of Nasdaq's board diversity rule in December 2024, leaving US board composition governed by investor expectation rather than by seat.
11 December 2024
Nasdaq's rule had required listed companies to disclose board diversity statistics and to have, or explain why they did not have, diverse directors. Sitting en banc, the Fifth Circuit vacated the SEC order approving it.
California's board composition statutes had already been held unconstitutional in state litigation and are not enforced. The result is that the United States now has no mandatory board diversity requirement at either federal or major state level.
US board composition remains governed by the exchanges' independence standards — a majority independent board under NYSE 303A.01 and Nasdaq 5605(b)(1), with fully independent audit, compensation and nominating committees — and by SEC Rule 10A-3 on audit-committee independence.
What it means for a cross-border candidate
For a cross-border candidate this cuts both ways. The seat that pushed some US boards to widen their search has gone, so a diversity-framed approach to a US board now lands with proxy advisers and large asset managers rather than with a listing rule. What has not changed is the majority-independence arithmetic across roughly 5,600 issuers, which is still the largest pool of independent seats in the world.
This paragraph is the Global ID Exchange’s own reading, not a statement by any authority named above. Everything in the body of this item is a matter of record; this is judgement.
Sources
- Alliance for Fair Board Recruitment v. SEC (5th Cir., en banc, December 2024)
- NYSE Listed Company Manual 303A.01; Nasdaq Rule 5605(b)(1)
Rules change and transitional provisions frequently apply. Verify against the primary instrument before you rely on any provision described here.
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