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California Bill Amended To Impose $100K Penalty For Failure To Report Timely Board Gender To Secretary Of State

I have written several posts about a bill, SB 826, now pending in the California legislature that would impose fines on publicly held corporations that fail to meet prescribed gender quotas.  See California Bill Would Mandate Gender Quotas For Publicly Traded Companies, State Has No Clue As To How Much Board Gender Mandate Will CostCalifornia Gender Equity Quota Bill AdvancesImpossibility And California's Proposed Gender Quota LawWill California's Board Gender Quota Bill Encourage Corporations To Dump Male Directors, and Increasing The Size Of The Board And Rounding Out The Hours

Earlier this week, the authors amended the bill to impose a $100,000 fine on companies that fail to file timely board gender information with the Secretary of State pursuant to as yet to be adopted regulations.  The bill was also amended to specify the dollar amount of penalties for violations of the gender quotas (before amendment, penalties were based on multiples of director compensation).  First time violations will incur a $100,000 penalty.  A subsequent violation will cost $300,000.

Friday, August 31 will be the last day for each house to pass bills, except bills that take effect
immediately or bills in Extraordinary Session.  Cal. Const. Art. IV, §10(c) & Joint Rule No. 61(b)(18).  SB 826 appears to be moving to Governor Jerry Brown's desk and he will have until Sept. 30 to sign or veto bills.   

Out-of-state readers should take note that SB 826 isn't limited to California corporations.  If enacted, the bill will impose gender mandates on publicly traded foreign corporations having their principal executive offices in California, according to their most recent annual report on Form 10-K.  The bill defines "publicly traded corporation" to mean "a corporation with outstanding shares listed on a major United States stock exchange".  

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About this Author

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

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...