October 16, 2018

October 16, 2018

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October 15, 2018

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Who Is A Female? New California Statute Provides An Answer

California's new gender quota law, SB 826, has attracted widespread attention.  The law mandates that a publicly held domestic or foreign corporation principal executive offices, according to the corporation’s SEC Form 10-K , are located in California must have a minimum of one female director on its board by the close of 2019.  No later than the close of 2021, the corporation must have a minimum of three female directors, if its number of directors is six or more; a minimum of two female directors if its number of directors is five, or a minimum of one female director if its number of directors is four or fewer.  Some readers have questioned the definition of "female" for purposes of the statute.

The California legislature has defined "gender" in several different codes (e.g., Civ. Code § 51; Educ. Code § 10.7; and Ins. Code § 10140).  Recently, it has recognized at least three genders - female, male, and nonbinary.  See  California Bill May Spur Rewriting Gender Boilerplate.  I have been unable, however, to locate any existing California statute that defines "female", "male" or "nonbinary". 

Given the substantial penalties that may be assessed for failure to have the prescribed minimum number of female directors, who counts as a female director could be an important question.  The legislature provides a Delphic answer ("γνῶθι ἑαυτόν") by defining a "female" for purposes of the gender quota requirements as "an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth".  Cal. Corp. Code § 301.3(f)(1).  

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