Governor Gavin Newsom signed Assembly Bill 979 on Wednesday, October 7th. This bill requires that minority groups have representation on any publicly traded corporation whose principal executive office is located in California.
More specifically, this bill requires than no later than December 31, 2021, any such publicly traded corporation that has between one to four directors have a minimum of one director from an underrepresented community, as defined under the bill. By no later than December 31, 2022, any such publicly traded corporation with more than four but fewer than nine directors must have a minimum of two directors from underrepresented communities, and any such corporation with nine or more directors must have a minimum of three directors from underrepresented communities.
The bill defines “a director from an underrepresented community” as any 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.
All such publicly traded corporations must provide a report to the California Secretary of State confirming their compliance with these requirements. If the corporation fails to timely file the report with the Secretary of State, then the fine for a first-time violation is $100,000 and for a second or subsequent violations, the fine is $300,000.
Assembly Bill 979 essentially expands on existing California law that requires that women be represented on the board of directors of publicly traded corporations whose principal executive office is located in California. Under existing law, no later than December 31, 2019, any such publicly held domestic or foreign corporation whose principal executive office is located in California must have a minimum of one female director on its board. By no later than December 31, 2021, any such corporation with five directors must have a minimum of two women directors and any such corporation with six or more directors must have a minimum of three women directors. Existing law authorizes the California Secretary of State to impose fines for violations of these provisions.
If you have any questions regarding business law in California, or if you need legal representation or consul regarding a business matter, contact our Monterey business law attorneysto set up a free consultation.
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