A U.S. appeals court on Wednesday ruled that Nasdaq could not impose rules designed to increase diversity in corporate America by requiring companies listed on the exchange to have women and minority directors on their boards or explain why they do not.

The exchange sought to require listed companies to disclose the gender and racial makeup of their boards and set diversity targets.

Nasdaq required public companies to have at least one woman, person of color or LGBTQ member on their boards or explain why they do not.

Nasdaq's (NASDAQ:NDAQ) boardroom diversity targets for companies listed on the exchange have been struck down by a federal appeals court, which ruled that the Securities and Exchange Commission did not have the authority to approve such listing rules.