Hundreds of companies trading on the Nasdaq Inc. stock exchange may be forced to add diverse directors for the first time or explain why they haven’t, after U.S. regulators cleared the way for new listing requirements.

More than a third of companies trading on the Nasdaq lack a racially diverse director, and more than one in 10 have no female directors, according to an analysis by ISS Corporate Solutions of 2,284 companies where data were available. About 8% had neither a woman nor person of color on the board, the data showed. More than 3,000 stocks trade on the exchange, according to Nasdaq.

“The data shows clear evidence that there’s a small-cap company gap when it comes to diversity on U.S. boards,” Marija Kramer, head of ISS Corporate Solutions, said in an interview. “Listed companies, if they aren’t already, should think about how they’re going to recruit for more diverse directors.”

A Nasdaq representative declined to comment on the outside data.

Larger companies are already showing significant changes. The percentage of new Black directors on Fortune 500 boards almost tripled in 2020 compared with previous years as companies responded to pressure to add diversity in the boardroom, recruiter Heidrick & Struggles found.

“I think this is another level of emphasis,” said J. Veronica Biggins, a recruiter at Diversified Search Group and a member of the Southwest Airlines Co. board. “People today are specifically saying, ‘We want to see a diverse talent pool.’”

The new Nasdaq rule, which requires companies to publicly disclose the gender and racial makeup of their boards within roughly one year after the Securities & Exchange Commission gives its endorsement, does not mandate any changes. It does require companies that don’t have women or diverse members to explain why. Most listed companies would have as many as four years to meet the standard of one woman and one person of color on the board.

Companies with fewer than six directors are only required to have one diverse member to meet the recommended diversity level. Among about 300 Nasdaq-listed companies with fewer than six board members, 64% lacked diverse directors and 44% had no female members, ISS Corporate Solutions found. Almost a third had neither a woman nor a diverse director.

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