Appeals court will rehear challenge to Nasdaq board diversity rule, putting mandate at risk

• The 5th Circuit U.S. Court of Appeals said it will rehear a challenge to Nasdaq's board diversity rule.
• The rule mandates the disclosure by companies on that stock exchange about the diversity of their boards of directors and requires them to explain why they do not have a minimum number of women, minorities or LGBTQ+ people on those boards.
• The Securities and Exchange Commission had approved the Nasdaq rule.

A federal appeals court agreed to rehear a challenge by two conservative groups to Nasdaq's board diversity rule related to the disclosure of women and minority membership on boards of companies listed on the stock exchange.

The 5th Circuit U.S. Court of Appeals, in its order Monday night setting a rehearing, also vacated a decision in October upholding the Nasdaq rule by a three-judge panel from the appeals court, which encompasses Texas, Louisiana, and Mississippi.

The Nasdaq rule requires companies to disclose details about the diversity of their boards of directors, and to either have a minimum number of women and minorities on their boards or explain why they do not.

The 5th Circuit's order Monday said it will reconsider the challenge to the Securities and Exchange Commission's approval of the Nasdaq rule, with the full lineup of judges on that court rehearing the case in a so-called en banc proceeding.

The order came after a majority of the circuit judges in active service voted to rehear the case at the request of the petitioners. En banc rehearings are rarely granted. On Tuesday, the court tentatively oral arguments in the case for the week of May 13.

Edward Blum, president of the Alliance for Fair Board Recruitment, one of the petitioners challenging the rule, in a statement said that his group "is grateful