State Watch

California becomes first state requiring women to sit on corporate boards

California on Sunday became the first state to require publicly traded companies to have women on their boards of directors.

Gov. Jerry Brown (D) said in a statement to the California State Senate that he was signing the bill because "it's high time that corporate boards" include women.

"Given all the special privileges that corporations have enjoyed for so long, it's high time that corporate boards include the people who constitute more than half the 'persons' in America," he said.

The bill requires publicly-held corporations in California to have at least one woman on their boards by the end of 2019. By the end of 2021, the bill requires corporations to have two women on their boards for boards with five directors and three women for boards with six or more directors.

Brown also wrote in the statement that "there have been numerous objections" to the bill and that "serious legal concerns" have been raised. But he added that "recent events in Washington, D.C." and beyond made it clear that action was necessary.

"I don't minimize the potential flaws that indeed may prove fatal to its ultimate implementation," he said. "Nevertheless, recent events in Washington, D.C .-and beyond - make it crystal clear that many are not getting the message."

Corporations that don't follow the bill's mandates could face fines from California's secretary of state.

One-quarter of publicly traded corporations in California don't have any women on their boards, according to California state senator Hannah Beth Jackson (D), who originally introduced the legislation.

Jackson said in a statement last month that the insight of women on boards "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," she added.

The bill is opposed by several business groups. A coalition of those business groups, including the California Chamber of Commerce, argued in a letter to the California state Senate last month that the bill violated the U.S. constitution and the California state constitution.

The coalition also criticized the bill for focusing "only on gender."

"We agree with you as to the intent of the bill, which is to create more diversity on boards of directors. However, we disagree with the manner in which SB 826 seeks to accomplish this goal," the coalition wrote.

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