On Sept. 30, Governor Brown signed SB 826 into law, which requires all publicly held, domestic or foreign corporations with principal executive offices in California to have at least one female director on the board, commencing Dec. 31, 2019. It also requires boards containing more than four board members to increase the number of female directors on the board no later than the end of 2021. If the board has five directors, the corporation must have at least two female directors. If the board has six or more directors, the corporation must have at least three female directors on its board.
This bill intends to promote equitable and diverse gender representation on every corporate board. One-fourth of California’s publicly held corporations have no female directors on their boards. Additionally, California’s public corporations have fewer female directors than public corporations elsewhere in the United States. In California, only 15.5% of board seats are held by women, relative to 16.5% of board seats held by women in Russell 3000 companies, 19.8% of board seats held by women in Fortune 1000 firms, and 21.3% of S&P 500 boards.
This is the first law of its kind in the United States, though similar laws have been enacted in Europe. As California is the fifth largest economy in the world, this bill has the potential to set an example for the rest of the nation and the world. The National Association of Women Business Owners-California, which sponsored the bill, states that “women business owners are CEOs who bring a diversity of thought, represent the majority of consumer purchasing power, and understand supplier/vendor relationships. As directors, we would be role models for aspiring women leaders inside corporations.”