August 4, 2020

Volume X, Number 217

August 04, 2020

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August 03, 2020

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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. 

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 184

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About this Author

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

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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