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DIVERSITY IN BOARDS OF DIRECTORS IS NOW MANDATED BY LAW

Last fall, Governor Newsom signed into law Assembly Bill 979 (AB-979) mandating that all California based public company board of directors have at least one non-white board member by the end of 2021. By the end of 2022, boards with five to eight members will be required to have two directors from underrepresented groups and corporations with nine or more directors must have at least three directors from underrepresented communities.

Although public companies have until the end of 2021 or 2022 to make these changes, the replacement of board members can take time. And because AB-979 impacts how board members are removed or replaced, it also necessitates that corporations review and make changes to their bylaws.  Where compliance with the law will require the removal of any current board members, companies should be cautious—this type of adverse situation can be risky and expose the corporation to potential liability.

The new law is intended to achieve diversity on corporate boards but does not detail lawful methods for compliance with the requirements.  It essentially requires corporations to enact a strict quota system and requires decision-making based on protected classes.  It will be interesting to see what legal challenges arise from this.  If your company needs advice about diversity in your board of directors, give us a call and we will be happy to help.

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This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.

Testimonials

Ghassemian Law provided thoroughly constructed and effective legal strategies for successful outcomes in the complex world of construction law for our small company. Core competence, due diligence, and a commitment to client needs are strengths that inspire confidence and keep producing results when it counts most.

Peter Greenberger

Pacwest Construction and Development Inc

Mahyar and her team possess a wealth of construction and business law expertise. Expertise to both guide a client away from litigation and, if not possible, to skillfully represent them in court.

Thierry Montoya

AlvaradoSmith APC

Mahyar Ghassemian and her firm are the best construction dispute litigators and negotiators in the industry. Mahyar is an expert in this area. Her firms knows the law and are very tenacious in obtaining the best results for their clients. I have been involved in very lengthy litigation as co-counsel in a very big case and jury trial. Mahyar is one of the hardest working and most effective advocates I have ever had the privilege of working with.

Paul Hoffman

Hoffman Legal Corporation

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