Improving Corporate Governance Through Diversity Act of 2021
Bill: S.374 | Sponsor: Sen. Menendez, Robert (D-NJ)
Policy area: Finance and Financial Sector

Summary:
Improving Corporate Governance Through Diversity Act of 2021
This bill requires certain issuers of securities to disclose the racial, ethnic, and gender composition of their boards of directors and executive officers, as well as the status of any of those directors and officers as a veteran. It also requires the disclosure of any plan to promote racial, ethnic, and gender diversity among these groups.
The Securities and Exchange Commission must establish a Diversity Advisory Group to report on strategies to increase gender, racial, and ethnic diversity among board members.

To amend the Securities Exchange Act of 1934 to require the submission 
   by issuers of data relating to diversity, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improving Corporate Governance 
Through Diversity Act of 2021''.

SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY ISSUERS.

    Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 
is amended by adding at the end the following:
    ``(s) Submission of Data Relating to Diversity.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `executive officer' has the meaning 
                given the term in section 230.501(f) of title 17, Code 
                of Federal Regulations, as in effect on the date of 
                enactment of this subsection; and
                    ``(B) the term `veteran' has the meaning given the 
                term in section 101 of title 38, United States Code.
            ``(2) Submission of disclosure.--Each issuer required to 
        file an annual report under subsection (a) shall disclose in 
        any proxy statement and any information statement relating to 
        the election of directors filed with the Commission the 
        following:
                    ``(A) Data, based on voluntary self-identification, 
                on the racial, ethnic, and gender composition of--
                            ``(i) the board of directors of the issuer;
                            ``(ii) nominees for the board of directors 
                        of the issuer; and
                            ``(iii) the executive officers of the 
                        issuer.
                    ``(B) The status of any member of the board of 
                directors of the issuer, any nominee for the board of 
                directors of the issuer, or any executive officer of 
                the issuer, based on voluntary self-identification, as 
                a veteran.
                    ``(C) Whether the board of directors of the issuer, 
                or any committee of that board of directors, has, as of 
                the date on which the issuer makes a disclosure under 
                this paragraph, adopted any policy, plan, or strategy 
                to promote racial, ethnic, and gender diversity among--
                            ``(i) the board of directors of the issuer;
                            ``(ii) nominees for the board of directors 
                        of the issuer; or
                            ``(iii) the executive officers of the 
                        issuer.
            ``(3) Alternative submission.--In any 1-year period in 
        which an issuer required to file an annual report under 
        subsection (a) does not file with the Commission a proxy 
        statement or an information statement relating to the election 
        of directors, the issuer shall disclose the information 
        required under paragraph (2) in the first annual report of 
        issuer that the issuer submits to the Commission after the end 
        of that 1-year period.
            ``(4) Annual report.--Not later than 18 months after the 
        date of enactment of this subsection, and annually thereafter, 
        the Commission shall submit to the Committee on Banking, 
        Housing, and Urban Affairs of the Senate and the Committee on 
        Financial Services of the House of Representatives, and publish 
        on the website of the Commission, a report that analyzes the 
        information disclosed under paragraphs (2) and (3) and 
        identifies any trends with respect to such information.
            ``(5) Best practices.--
                    ``(A) In general.--The Director of the Office of 
                Minority and Women Inclusion of the Commission shall, 
                not later than 3 years after the date of enactment of 
                this subsection, and every 3 years thereafter, publish 
                best practices for compliance with this subsection.
                    ``(B) Comments.--The Director of the Office of 
                Minority and Women Inclusion of the Commission may, 
                pursuant to subchapter II of chapter 5 of title 5, 
                United States Code, solicit public comments related to 
                the best practices published under subparagraph (A).''.

SEC. 3. DIVERSITY ADVISORY GROUP.

    (a) Definitions.--For the purposes of this section:
            (1) Advisory group.--The term ``Advisory Group'' means the 
        Diversity Advisory Group established under subsection (b).
            (2) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (3) Issuer.--The term ``issuer'' has the meaning given the 
        term in section 3(a) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)).
    (b) Establishment.--The Commission shall establish a Diversity 
Advisory Group, which shall be composed of representatives from--
            (1) the Federal Government and State and local governments;
            (2) academia; and
            (3) the private sector.
    (c) Study and Recommendations.--The Advisory Group shall--
            (1) carry out a study that identifies strategies that can 
        be used to increase gender, racial, and ethnic diversity among 
        members of boards of directors of issuers; and
            (2) not later than 270 days after the date on which the 
        Advisory Group is established, submit to the Commission, the 
        Committee on Banking, Housing, and Urban Affairs of the Senate, 
        and the Committee on Financial Services of the House of 
        Representatives a report that--
                    (A) describes any findings from the study conducted 
                under paragraph (1); and
                    (B) makes recommendations regarding strategies that 
                issuers could use to increase gender, racial, and 
                ethnic diversity among board members.
    (d) Annual Report.--Not later than 1 year after the date on which 
the Advisory Group submits the report required under subsection (c)(2), 
and annually thereafter, the Commission shall submit to the Committee 
on Banking, Housing, and Urban Affairs of the Senate and the Committee 
on Financial Services of the House of Representatives a report that 
describes the status of gender, racial, and ethnic diversity among 
members of the boards of directors of issuers.
    (e) Public Availability of Reports.--The Commission shall make all 
reports of the Advisory Group available to issuers and the public, 
including on the website of the Commission.
    (f) Inapplicability of Federal Advisory Committee Act.--The Federal 
Advisory Committee Act (5 U.S.C. App.) shall not apply with respect to 
the Advisory Group or the activities of the Advisory Group.
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