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California may become the first state to mandate women on boards

Over a quarter of all publicly traded companies in California don’t have a single woman sitting in their boardrooms, according to a 2017 report on publicly traded companies with headquarters in California. This compared to 33.75 per cent of companies with one woman on their boards, and 3.6 per cent of companies who had more than three women on their boards. The report was produced by Board Governance Research LLC.

The bill, SB 826, in addition to creating the requirement of publicly traded companies having at least one woman on their boards by the end of 2019, also adds that either on or before December 31, 2021, the bill would increase that original requirement to having a minimum of two female directors if the corporation has five “authorized directors”, or having a minimum of three female directors if the company has more than six “authorized directors.”

According to TechCrunch, the bill won Senate approval — but with only Democratic votes — and must clear the assembly by the end of August.

Reactions to the bill have been mixed, some are saying that it’s a good thing to be using legislation to promote gender diversity in the boardroom.

Others disagree. In an open letter to the California State Senate, the California Chamber of Commerce — joined by various associations and other chambers of commerce in the state — says the bill “likely violates the United States Constitution, California Constitution, and California’s Civil Rights Act.” The main concern of the group is that they don’t feel SB 826 is the best way to accomplish the creation of more diversity within boards of directors in the state.

In an editorial piece from the L.A. Times Editorial board, various members of the board debated the bill and its potential effects.

“I am not persuaded by the argument that it’s not a good idea because other states don’t do it. Other states are not California,” writes Mariel Garza. “What I do support is bold proposals from the state Legislature. Maybe it’s too nutty even for California, maybe not. But good for Jackson and Atkins, the first female leader of the California Senate, for making us confront this gross disparity.”

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