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State Has No Clue As To How Much Board Gender Mandate Will Cost

Several previous posts have highlighted a bill that would impose a gender mandate with respect to the boards of directors of publicly traded corporations that maintain their principal executive office in California.  Having passed out of both the Senate Judiciary and Banking and Financial Institutions committees, the bill is now in the Senate Appropriations committee.  The bill places imposes significant new burdens on the Secretary of State.  For example, the Secretary of State will be required to compile and publish annual reports regarding compliance by subject corporations and will be authorized to impose fines for violations. 

I am sure that no one will be surprised to learn that the state has no idea what this will cost.  However, according to the analysis prepared for the Appropriations Committee, there will be "[u]nknown, significant costs for SOS to collect data required to investigate corporations in order to produce an initial report and annual reports thereafter" as well as "[s]ignificant ongoing costs of approximately $600,000 annually for additional workload to develop regulations and to investigate and process violations".  These costs may be offset by fines collected by the Secretary of State.  The analysis did not include an estimate for the costs of litigating any constitutional challenge to the statute.

Will corporations be required to disclose the genders of their directors?

As I have previously pointed out, the Secretary of State has no objective way of determining the gender of directors (Item 401 of Regulation S-K requires companies to disclose names and ages, but not gender).  The Secretary of State may therefore try to impose a new gender disclosure filing requirement pursuant to the authorization to adopt implementing regulations.  Soon, perhaps, companies will be implementing gender disclosure controls and annual gender certifications.

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