October 24, 2020

Volume X, Number 298

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October 21, 2020

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California Adopts Strict Quotas For Public Company Boards

Yesterday, Governor Gavin Newsom signed AB 979 into law.  The new law will apply to publicly held corporations having their principal executive offices in California to have specified numbers of directors from "underrepresented communities".   The law requires that these corporations have at least have a  one director from an underrepresented community by the end of next year.  By the end of 2022, subject corporations more than 4 but fewer than 9 directors must have a minimum of 2 directors from underrepresented communities and corporations with 9 or more directors must have a minimum of 3 directors from underrepresented communities.

The law is subject to constitutional challenge on several different grounds, including the equal protection clauses of the U.S. and California constitutions, the First Amendment of U.S. Constitution, and the Commerce Clause of the U.S. Constitution.  In addition, corporations who implement the law may be deemed to be "state actors" and hence liable for civil rights violations under 42 U.S.C. Section 1983.  See Will AB 979 Expose Corporations To Section 1983 Liability?

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 275
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About this Author

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

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...

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