The US state of California has legislated to mandate the inclusion of women on boards of publicly held companies headquartered in the state.
“Publicly held domestic or foreign corporation[s] whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California” would need to have at least one female director by the end of 2019.
By the end of 2021, boards with five members will have to have at least two women. boards with six or more members must comprise at least three. Those with four or less will need to maintain at least one female director.
For foreign publicly held corporations this law will apply to the exclusion of the law of the jurisdiction in which the foreign corporation is incorporated. A publicly held corporation is defined as a corporation with outstanding shares listed on a major US stock exchange.
This will impact a handful of ASX-listed technology and biotechnology companies located in California.
The secretary of state will publish a list of companies complying with the legislation.
Companies who do not file board member information with the secretary of state in a timely fashion will face fines of US$100,000. Companies who do not comply with the legislation will receive a fine of US$100,000 in the first instance and US$300,000 for every instance after that.
If a company is required to have more than one female director on their board, the fine will be imposed for each missing female director.
“One-fourth of California’s publicly traded companies still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive,” said Senator Jackson, a co-author of the Bill (See HERE). “With women comprising over half the population and making over 70% of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions, and profitability. The time has come for California to bring gender diversity to our corporate boards.”
The Bill passed the senate was signed off by Governor Jerry Brown on Sunday 30 September.
Gov. Brown noted in his signing statement (See HERE) that there had been numerous objections to the Bill and serious legal concerns raised.
“I don’t minimise the potential flaws that indeed may prove fatal to its ultimate implementation. Nevertheless, recent events in Washington DC and beyond make it crystal clear that many are not getting the message.”
The Bill can be found HERE.
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