March 27, 2023

Volume XIII, Number 86


March 24, 2023

Subscribe to Latest Legal News and Analysis

Bill Would Impose Minimum Number Of "Directors From An Underrepresented Community"

In 2018, the California legislature enacted SB 826 (Jackson) which imposed gender quotas on corporate boards of directors of "publicly held corporations".  See California Enacts Novel Female Board Quota Legislation.  The constitutionality of that legislation is now before the courts.  See Secretary Of State Must Answer Legal Challenge To Female Director Quota Law.

On Monday, Assembly Member Chris Holden gutted and amended AB 979 to impose a similar quota requirement on domestic and foreign publicly held corporations having their principal executive offices in California.  Similar to SB 826, corporations will be required to have a minimum of one director from an underrepresented community no later than the close of the 2021 calendar year.  By the close of the 2022 calendar year, the minimum numbers would be as follows:

  • Three, if the corporation's number of directors is nine or more;

  • Two, if the corporation's number of directors is more than four but fewer than nine; and

  • One, if the corporation's number of directors is four or fewer.  

The bill would also impose similar reporting requirements on the Secretary of State and subject violators to significant fines.

The bill defines a "director from an underrepresented community" to mean an individual who is African-American, Hispanic, or Native American. 

The legislature goes into summer recess today and will reconvene on July 13.  J.R. 51(b)(2).  AB 979 has been assigned to the Senate Committee on Rules. 

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 184

About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...