The US Securities and Exchange Commission has accepted the New York Stock Exchange's proposal, which aims to increase diversity among the board members of listed companies. However, if the listed company is foreign, then two women can replace the black, Latino and pro-LGBTQ board members, CNN's business website reported.
The rule requires all companies listed on the New York Stock Exchange to employ at least two "rainbow-colored" board members. In all cases, this means a woman and a member of the "underrepresented" minority groups, i.e. who is black, Latin American, or belongs to the LGBTQ community.
Companies that do not employ at least two "diverse" directors must provide written reasons for their decision. Smaller companies, as well as foreign companies listed on the New York Stock Exchange - in the absence of a black, Latino or LGBTQ member - can escape prosecution with two female board members, CNN's business website reports.
Listed companies must publish board diversity statistics within one year and appoint at least one "diverse" director within two years and two "diverse" directors within five years, depending on the company's size and stock market classification.
"These rules allow investors to better understand listed companies' beliefs about board diversity, while also ensuring that these companies have the flexibility to make decisions that best serve their shareholders," explained Gary Gensler, chairman of the SEC, rather confusingly . .
The New York Stock Exchange first outlined its board diversity rules in December with the goal of "supporting stronger economies by promoting inclusive growth and prosperity."
White women and minority executives accounted for 38.3 percent of Fortune 500 company board seats in 2020, up from 34 percent in 2018, according to a joint study by the Association for Board Diversity (ABD) and Deloitte.
In September 2020, California Governor Gavin Newsom signed the Diversity Act, which requires companies to have at least one board member from members from "underrepresented communities"
Companies that do not comply with the so-called diversity rule can expect brutal fines, in some cases between 100 and 300 thousand dollars (30-90 million forints).
However, the Republican members of the US Senate Banking Committee, led by Senator Pat Toomey, opposed such regulation of Nasdaq, and in February called on the US Securities and Exchange Commission to reject the proposal. Now it seems that opponents of "rainbow boards" are in the minority in America.
Source: hirado.hu
