In an en banc decision filed on December 11, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the 2021 approval by the SEC of rules adopted by Nasdaq to promote more diverse board membership at Nasdaq-listed companies. The decision overturned an earlier ruling by a three-judge panel of the Fifth Circuit that had upheld the SEC’s approval of the Nasdaq diversity rules. Nasdaq, which filed a brief as an intervenor supporting the SEC’s defense of its decision to approve the Nasdaq rules, has posted interpretive guidance on its website stating that “Nasdaq does not intend to seek further review of that decision.” The Fifth Circuit decision eliminates the last remaining diversity requirements that were broadly applicable to public companies listed on U.S. national stock exchanges, and has several important implications for Nasdaq-listed companies as they prepare for the 2025 proxy season.
Review our client alert discussing the practical implications of this decision for the upcoming proxy season.
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