Secretary Of State Modifies Corporate Disclosure Form In Response To Gender Quota Law
California's gender quota law took effect on January 1 of this year. Cal. Stats. 2018, Ch. 954 (SB 826 (Jackson)). By December 31, 2019, a publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s annual report on Form 10-K are located in California must have a minimum of one female (as defined) director on its board. The law imposes substantial enforcement and reporting obligations on the California Secretary of State's office.
California has for some time required publicly traded corporations organized under the General Corporation Law and publicly traded foreign corporations registered to transact intrastate business to file annually a corporate disclosure statement (Form SI-PT) with the Secretary of State's office. Cal. Corp. Code §§ 1502.1 & 2117.1 This requirement was imposed by the Corporate Disclosure Act which was enacted in 2002. Cal. Stats. 2002, ch. 1015 (AB 55 (Shelley)).
Recently the Secretary of State revised Form SI-PT to elicit information with respect to compliance with the new gender quota law. Although the revised form adds two questions: Does the corporation's Form 10-K list a California principal executive office address and if so, does the corporation have 1 or more female directors on its current board?
Unfortunately, the form does not make clear the fact that the General Corporation Law defines "publicly traded corporation" differently than "publicly held corporation". For example, a corporation with a class of securities admitted for trading on the OTC Bulletin Board will qualify as a "publicly traded corporation". Cal. Corp. Code § 1502.1(b)(1). The definition of "publicly held corporation" requires that the corporation have outstanding shares listed on a major United States stock exchange. Cal. Corp. Code § 301.3(f)(2). Thus, not every California corporation or foreign corporation required to file an annual report under the Corporate Disclosure Act is subject to California's board gender quota law.