California Requires Board Diversity And Additional Company Disclosures

Jackson Lewis P.C.
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On September 30, 2020, California Governor Gavin Newsom signed a bill into law requiring publicly held corporations to further diversify their boards of directors. He also signed a bill requiring that corporations and limited liability companies make additional disclosures.

Assembly Bill 979 (AB 979) adds Section 301.4 to the California Corporations Code. This Section requires corporations to have at least one director from an underrepresented community on their boards of directors by the close of the 2021 calendar year, with increases the following year for boards of certain sizes. Under the law, “‘[d]irector from an underrepresented community’ means 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.” A corporation may increase the number of directors on its board to comply with the law. The law applies to publicly held domestic or foreign corporations with principal executive offices in California.

Assembly Bill 3075 (AB 3075) requires a corporation or limited liability company to disclose whether any officer or any director (or any member or manager, if a limited liability company) has an outstanding final judgment issued by a court or California’s Division of Labor Standards Enforcement for violation of the California Labor Code or any wage order. The new disclosure requirement will take effect no later than January 1, 2022, and possibly sooner as set forth in the law. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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