Business Law

California Secretary of State Releases First Report on Corporations With Female Board Members

On July 1, 2019, the California Secretary of State released its first Report on Corporations with Female Board Members.  The Report can be found on a new webpage launched by the Secretary of State called Women on Boards.  The new webpage provides reports on corporations that have indicated compliance with SB 826 and the universe of identified companies that will have to comply, plus methodology and additional resources.

Section 301.3 of the Corporations Code of the California General Corporation Law, as adopted pursuant to SB 826, requires every publicly held corporation whose principal executive offices are located in California, according to the corporation’s annual report on Form 10-K filed with the Securities and Exchange Commission, to have at least one female director on its board by the end of 2019 and at least two, or three, female directors by the end of 2021 if the board consists of five, or six or more directors, respectively.  Section 2115.5 provides that Section 301.3 applies to a foreign corporation that is a publicly held corporation to the exclusion of the law of the jurisdiction in which the foreign corporation is incorporated.  These statutes define “publicly held corporation” as a corporation with outstanding shares listed on a major United States stock exchange.

Section 301.3 also requires the Secretary of State to publish an initial report no later than July 1, 2019, and thereafter, annual reports documenting the number of corporations whose principal executive offices are located in California and who have at least one female director. Starting January 1, 2019, publicly traded corporations (defined in Sections 1502.1 & 2117.1) have been required to disclose on the Corporate Disclosure Statement (Form SI-PT) filed with the Secretary of State whether the corporation’s Form 10-K lists a California principal executive address, and, if so, whether it has at least one female director on its current board of directors. 

The first Report is an excel spreadsheet that lists all public companies that have reported their principal executive offices as located in California and a list of companies that have reported compliance with Section 301.3.  Subsequent annual reports, with the next report required to be published by March 1, 2020, are also required to report the number of publicly held corporations that moved their U.S. headquarters to California from another state or out of California into another state during the preceding calendar year and the number of publicly held corporations that were subject to Section 301.3 during the preceding year but are no longer publicly traded.

This e-bulletin was prepared by Katherine J. Blair, a partner at Manatt, Phelps, & Phillips, LLP. Ms. Blair is a member of the Corporations Committee of the Business Law Section of the California Lawyers Association.

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