September 21, 2021

Volume XI, Number 264

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September 21, 2021

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September 20, 2021

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California's Racial/Ethnic Board Quota Bill Amended To Include Sexual Orientation

Next Monday will mark the end of the California legislature's current session, meaning that any bill not passed by that date will die.  Typically, the last few days of a legislative session are chaotic with many bills being amended at the eleventh hour. 

I have previously written about AB 979 (Holden) which would require publicly held domestic and foreign corporations with their principal executive offices in California to have minimum numbers of directors from "underrepresented communities".  AB 979 is patterned after SB 826 which imposes female director quotas.  See California Enacts Novel Female Board Quota Legislation.

AB 979 was amended last Thursday to expand the definition of "director from an underrepresented community" to include an individual who self-identifies as "as gay, lesbian, bisexual, or transgender". 

The bill also included some additional legislative findings with respect to current racial and ethnic group representation on public company boards.  This may have been in response to my testimony before the Senate Banking and Financial Institutions Committee in which I pointed out that the legislative findings in the bill did not relate to director representation.  The amendments did not address my other comments, including the fact that the bill will discriminate against males board candidates who are from underrepresented communities.  Oddly, the bill will now also discriminate in favor of transgender females and against transgender males.  It would also privilege transgender females over individuals self identifying only as female because transgender females would apparently qualify as "female" under SB 826 and as being from an underrepresented community under AB 979.  It is unknown if this was intended and, if so, why.

Another obvious problem is that it relies on self-identification.  Does this mean that identification may be wholly-subjective?  Could a person with no factual basis simply self-identify as being from an underrepresented community?  Could Rachel Dolezal, for example, self-identify as Black?

The bill's categories, moreover, are vague and ambiguous.  For example, could former California Supreme Court Justice Marvin Baxter self-identify as Asian based on his Armenian ancestry?  Could former U.S. Supreme Court Justice Benjamin Cardozo have self-identify as Hispanic based on his status as a Sephardic Jew?  Justice Cardozo was a member of Shearith Israel, the Spanish and Portuguese Synagogue in New York.  Shearith Israel, which was founded in 1654, was the first Jewish congregation to be established in North America.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 239
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About this Author

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