California Bill Requires Companies to Include Directors From Underrepresented Communities on their Boards

Harvard Law School Forum on Corporate Governance, the top online resource for discourse on corporate governance, recently published a client alert authored by Shareholder Activist partner Ron Berenblat and associate Ian Engoron. The article “California Bill Requires Companies to Include Directors From Underrepresented Communities on their Boards” discusses California State Legislature recently passing a new and unprecedented bill intended to promote greater diversity in corporate boardrooms. If signed into law by the governor, California’s Assembly Bill (AB) 979 would require each publicly held corporation whose principal executive offices are located in California to have a minimum number of directors from an “underrepresented community” on its board of directors. The bill defines “underrepresented community” to include 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. Two years ago, California became the first state to enact legislation requiring public companies headquartered in the state to include a minimum number of females on their corporate boards. If enacted, AB 979 would establish nearly identical requirements as the bill related to the representation of females on corporate boards and follow the prior bill as new Section 301.4 of the California Corporations Code.