As this has been a whirlwind of a year, one thing that has improved is the recognition of diversity on corporate boards, and more specifically the importance of having women be represented on corporate boards. This revelation has led to an increase in studies that have shown that there has been a “significant increase in the number of women on corporate boards of New York’s largest publicly listed companies but there is still a need for much greater representation”.
To increase the number of studies and the reliability of them, “On June 27, 2020, New York’s disclosure law: The Women on Corporate Boards Study Act (Section 408 of the Business Corporation Law, S4278), (the “Act”)”. Relevant to this act, the New York Department of State in collaboration with the Department of Taxation and Finance has become in charge of conducting a study regarding “the proportion of female directors on boards of both domestic and foreign companies authorized to do business in New York State.”
This law applies to all business corporations that have been authorized to do business in New York state including both public and private for-profit businesses. This law requires that all companies will have to state the number of individuals on the board of directors and how many of those individuals are women. After receiving this information The Department of State “will publish the findings of the study on its website on February 1, 2022, and follow up comparative reports will be filed every four years thereafter”
If a company refuses to comply there is no penalty however this act now makes it so that every question on a company's biennial statement must be answered. A biennial statement is a statement that is filed with the New York Department of State and is required by Section 408 of the Business Corporation Law. The statement includes questions such as: “(i) the name and business address of its chief executive officer, (ii) the street address of its principal executive office, (iii) the address to which the New York Secretary of State shall forward copies of process accepted on behalf of the corporation and (iv) the number of directors constituting the board and how many directors of such board are women.” If a company fails to file a biennial statement they can be fined $250 or could have impacts to their good standing certificate which is a certificate that states “a company is properly registered with the state, is up to date on all state registration fees and required document filings, and is legally permitted to engage in business activities in the state.”
With the abundance of positives that this new law brings there does pose potential harm for companies in New York this is because the information that is stated by all of these companies will be published in a review that is accessible to all individuals. Due to this, some firms may Be receiving backlash or a judgment due to the lack of women on their board of directors or anything in between because of this businesses will recommend having to make sure they have 3 aspects taken care of. One day must be able to issue press releases and have good communication with the public to be able to communicate any questions they have about their board or Make sure that they have the right message out there for the public to see. Second, they must be prepared to address issues with their shareholders if any do come up about the number of women or the diversity on their board of directors. Finally, they must be able to examine their own company and take steps beforehand to make sure that they have a diverse and well-oiled machine on their hands as many would say.
In terms of other states other than New York California and Illinois are passing similar laws that are requiring companies to disclose the number of women on their board directors and increase their Diversity on their leadership teams. For example, in California, there have been multiple laws enacted such as SB 826 which requires that “every publicly held domestic or foreign business whose principal office is located in California to have at least one women director on its board by the end of 2019.” Additionally, in September of 2020, law AB 979 was passed requiring that “publicly listed companies headquartered in California (must) appoint at least one director from an underrepresented community to their board by the end of 2021 (with underrepresented including individuals who self-identify as “ Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native America, Native Hawaiian or Alaska Native” or “gay, lesbian, bisexual, or transgender”)” For individuals who do not comply with these new acts there can be fined for up to a $100,000 on the first violation and $300,000 for the ones preceding the first).
With these laws getting stricter and more studies being conducted not only will diversity and equality continue on corporate boards in major businesses All Over America but especially in the top states with the largest businesses such as New York, California, Illinois, and more. With these different acts being passed we hope to see a greater diversity as well as other countries following as well she not only improve the gender equality and diversity in major companies Across America but also across the worlds to provide individuals who have been deprived of an opportunity due to their nationality race or gender to be able to get a job that they deserve and are qualified for Which is what exactly these acts are in place to do as well as to set an example or a more inclusive path in the future.
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