Sep 29, 2021
In an interview with Canadian Lawyer, Osler’s Andrew MacDougall, partner, Corporate, and Jennifer Jeffrey, associate, Corporate, said that new diversity rules recently approved by the U.S. Securities and Exchange Commission will go a long ways towards better inclusivity on boards of directors.
The new rules compel most Nasdaq issuers, including Canadian firms, to have at least two diverse directors on boards, including one female. Jennifer described the rules as “truly revolutionary in that it’s the first regulator in the world to mandate diversity beyond gender on public company boards.”
The introduction of the new rules is being staggered over the next four years and the Nasdaq is providing additional support to help issuers recruit qualified diverse directors. Under the new gender diversity disclosure, issuers on the Nasdaq must disclose the number of directors who self-identify as female, self-identify as male, self-identify as non-binary or do not wish to disclose their gender.
For foreign issuers, disclosure of demographic information will not be required to be broken down for each of the gender categories. Andrew says he had conversations with Nasdaq officials on why there is less specificity required of foreign issuers and was told that, while Canada has similar diverse demographics to the U.S., they are not identical. As well, foreign companies from other parts of the world who list on the Nasdaq may come from parts of the world where recognized categories of minorities may be very different from those identified in North America.
Nasdaq “deliberately recognized that there would be differences among foreign issuers with respect to this rule and provided flexibility to adjust the categories of what would be an underrepresented group in that jurisdiction,” says Andrew.
While it may take a few years for the rules to seep deep into the composition of boards, both Andrew and Jennifer say broadening the regulations to include more types of diversity helps drive inclusivity. “It will likely mean better boards because they will consist of more diversity of thought and opinion,” says Jennifer.
“It really reinforces the importance of encouraging diversity across multiple dimensions and across multiple characteristics that will add to the fundamental principles of good governance,” says Andrew.
Read Zena Olijnyk's full article in Canadian Lawyer posted on September 23, 2021
For more information about the new Nasdaq rules, see our Osler Update, and for more information about diversity disclosure in Canada, see our annual report on diversity disclosure practices.