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(Reuters) — The U.S. Securities and Exchange Commission approved a proposal from stock exchange operator Nasdaq Inc. that requires its listed companies to have diverse boards or explain why they do not.
The proposal requires that companies have two diverse directors, including one who identifies as female and another as an underrepresented minority or LGBTQ+, or explain why they do not. Companies also have to publicly disclose the diversity of their boards.
Women and minorities have been underrepresented in the top ranks of companies, leading to a recent reckoning on racial and gender diversity in Corporate America.
California and Illinois also have laws on board diversity for companies headquartered in their states.