Smaller companies and foreign companies on the exchange could comply with two female directors.
Companies will also be required to publicly disclose boardroom diversity statistics within one year and to have at least one diverse director within two years and two within four to five years, depending on the size of the company and their stock market exchange tier.
“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders,” SEC chairman Gary Gensler said in a statement.
The new Nasdaq disclosure requirements will provide “consistent and comparable data when making decisions about their investments,” he said.
Republican members of the US Senate’s banking committee, including Senator Pat Toomey, opposed the Nasdaq’s diversity rule, calling for the SEC to block its proposal in February.
“These prescriptive requirements may ultimately harm economic growth and investors by pressuring companies to select directors from a narrower pool of candidates and discouraging others from going public,” Toomey said in a statement following the news. “I’m disappointed Chairman Gensler is turning a financial regulator into a laboratory for progressive social engineering.”
CNN’s Chris Isidore and Jeanne Sahadi contributed to this report.