Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

Impossibility And California's Proposed Gender Quota Law

I have devoted several recent posts to California's proposed board gender quota bill, SB 826, that seems destined for the Governor's desk.  The bill would require "a publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California" to have a minimum of one female director on its board no later than the end of next year.  By the end of 2021, the corporation would be required to have a minimum of:
  • three female directors, if its number of directors is six or more;
  • two female directors, if its number of directors is five; or
  • one female director, if its number of directors is four or fewer.

First offenders would face penalties equal to the average annual cash compensation for the directors of the corporation.  The penalty for repeat offenders would be three times the average annual cash compensation of the directors.  

The fact that the bill penalizes the corporation is remarkable because it is impossible for the corporation to effect compliance.  Directors are elected by the shareholders.  Depending upon the applicable corporate code, the articles and bylaws, the board may fill vacancies on the board. 

California Civil Code Section 3531 provides that “[t]he law never requires impossibilities.”  Would impossibility be a defense then to the statute?  According to a California Supreme Court decision issued last week, the answer is probably not by itself.  In National Shooting Sports, Inc. v. California2018 Cal. LEXIS 4696, the Supreme Court held:

"[Civil Code Section 3531] is an interpretive aid that occasionally authorizes an exception to a statutory mandate in accordance with the Legislature’s intent behind the mandate.  The maxim has never been recognized, and we do not recognize it today, as a ground for invalidating a statutory mandate altogether."

This leaves open the possibility that Section 3531 coupled with a constitutional claim might carry the day.  However, that would be the subject of another post.

Share on:

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

RECOGNITION

YOUTUBE

FACEBOOK