In a move that is sure to draw high-profile legal challenges, California Gov. Jerry Brown has signed legislation requiring all corporate boards in the state to seat at least one woman member by the end of 2019. Brown said he was signing the law despite potentially “fatal” legal problems in the measure.
“Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America,” Brown wrote in a signing message.
By the end of 2021, the law ups the ante by requiring boards of five members to have at least two women and boards of six or more to have at least three female members.
One of the major legal issues facing the measure is the fact that corporations are governed by the laws of the states where they are incorporated, regardless of where they’re physically located. Some 80 percent of California’s publicly traded companies are incorporated in Delaware. And about one-quarter of all corporations in California lack female board membership.
“There have been numerous objections to this bill, and serious legal concerns have been raised,” Brown said. “I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation. Nevertheless, recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message.”
The measure was opposed by the California Chamber of Commerce and numerous business groups.