The law was inspired by first-of-its-kind legislation in 2018 that requires publicly held corporations headquartered in the state to diversify their all-male boards.
“The new law represents a big step forward for racial equity,” one of the bill’s authors Assemblyman Chris Holden, a Democrat from Pasadena, said in a statement. “While some corporations were already leading the way to combat implicit bias, now, all of California’s corporate boards will better reflect the diversity of our state.”
In 2022, boards with four to nine people must have at least two members from an underrepresented community and boards with nine or more people must have at least three. Companies that don’t comply could face stiff fines. The legislation did not draw significant opposition. No major groups were listed as opponents. Corporate attorney Keith Bishop testified against the bill,"it violates the Equal Protection Clauses of the U.S. and California Constitutions and the Commerce Clause of the U.S. Constitution."
“From a civil rights perspective and a corporate governance perspective, we ought to be encouraging corporations to have the best and brightest directors and that is really a function of the constituents of the corporation which are the shareholders,” Dhillon said.
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