On December 11, 2024 the Fifth Circuit Court of Appeals held that the SEC did not have the authority to approve the Nasdaq board diversity rules. In general, the board diversity rules required Nasdaq listed companies to (i) self-report certain statistical information regarding their board member’s ethnic, racial and gender makeup, and (ii) meet certain minimum diversity targets including one female director and one self-reported underrepresented minority director or explain the reasons for not meeting those targets.
Moving forward, Nasdaq has indicated that it does not intend to seek review nor will it require listed companies to follow the board diversity rules. It is uncertain how this will impact the diversity guidelines of proxy advisory firms this proxy season, which rely on board diversity information in making their recommendations. We will continue to monitor and provide updates as more information becomes available. If you have any questions about the effect of the vacated board diversity rules on your company, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group.