TheCorporateCounsel.net

Nasdaq’s “disclose or comply” board diversity rule is officially gone. Nasdaq filed the proposed technical amendments with the SEC last month to delete Rule 5605(f), requesting effectiveness as of February 4th – which was the effective date of the federal court’s decision that struck down the rule. The SEC notice declared the rule change operative upon filing.

Some companies continued to request board demographic info in their D&O questionnaires this season – in large part because the court decision came too late to make a change and it wasn’t certain whether Nasdaq would appeal, and also because it was unclear at the time the questionnaires went out whether investors would still want to see the info. We’ve now seen we’ve seen BlackRock and Vanguard shift their voting policy language on board diversity.

Where does that leave us for reporting season? Nasdaq companies are clearly no longer required to include a diversity matrix in the proxy statement. When it comes to other disclosures, Alphabet is one of the latest companies to pare back the DEI language in its Form 10-K (pg. 9). Many companies already included disclosure in their reports about opposing forces on ESG & DEI, but as Dave wrote last week, many more are looking at further refining their Form 10-K language in light of ongoing consideration & developments in their programs over the past year, as well as January’s Executive Orders on “Ending Illegal Discrimination & Restoring Merit-Based Opportunity” and “Ending Radical and Wasteful Government DEI Programs and Preferencing,” plus last week’s AG memo on “Ending Illegal DEI & DEIA Discrimination & Preferences,” which directs the DOJ to find “the most egregious & discriminatory DEI & DEIA practitioners in each sector of concern” before March 1st, and recent shareholder litigation.

Remember too, as Meredith blogged in December, the decision to vacate Nasdaq’s rules could have broader implications going forward, even when it comes to “traditional” disclosure rules. Stay tuned.

– Liz Dunshee