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Public Policy Newsletter Article

State Mandates New Layer of Board Composition Changes

  • 2020-10-22T15:00:00.000+0000
  • Author: Jimmy Jackson

A new law that California companies must be conscious of going forward was signed into law on September 30 by Governor Gavin Newsom. AB 979 (Holden and C. Garcia) requires, by December 31, 2021, that a corporation with its principal executive office in California (according to its SEC 10-K form, regardless of state of incorporation) have a minimum of one director from an underrepresented community (as defined in the bill). By December 31, 2022, a corporation with at least four but fewer than nine directors would have to have two members from underrepresented communities, and those with nine or more directors would have to have three from underrepresented communities. It is critical to note these requirements are in addition to those enacted in 2018 required a minimum percentage of women on corporate boards in California.

As defined in the bill, someone from a qualifying underrepresented community is an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.

Under the terms of existing law (referenced above), no later than December 31, 2021, a publicly held domestic or foreign corporation whose principal executive offices are located in California with six or more directors must have a minimum of three female directors, a board with five shall have a minimum of two, and a board with four or fewer shall have at least one female director. It is permissible for one director to count towards the thresholds of both the gender equity and underrepresented community provisions if they qualify separately under these provisions.