A guest post on Kevin LaCroix's D&O Diary site reports on the status of board diversity legislation at the state level. Money quote:
While California and Washington are currently the only states with mandatory diversity requirements, nearly all of the bills introduced in state legislatures in 2021 have followed that approach – including Connecticut, Hawaii, Massachusetts, Michigan, New Jersey, and Oregon. Illinois and Maryland require only disclosure of boardroom demographics, but do not mandate any level of board diversity. Colorado and Pennsylvania have non-binding diversity requirements, urging companies to act on their own; Ohio has introduced similar legislation.
Some striking points:
- Maryland's mandatory disclosure statute applies to both for-profit and not-for-profit entities.
- New York's mandatory disclosure bill applies to both public AND privately held companies authorized to do business in the state.
- If adopted, Ohio's non-binding resolution urging board diversity also applies to both public and privately held corporations that are "doing business" in the state.
- 9 of the 11 statutes apply not just to companies incorporated in the adopting state but also to companies headquartered in the state
- As noted, New York applies to any corporation--whether incorporated in New York or not--authorized to do business in the state
- As noted, Ohio's applies to all companies "doing business" in Ohio, whether incorporated there or not.
All 11 have thus tossed the internal affairs doctrine out the window. As regular readers know, I believe that the internal affairs doctrine is both sound public policy and a constitutional requirement. As such, my view is that all of these statutes are constitutionally suspect.
As always, the wisdom and constitutionality of such statutes if limited to companies incorporated in the adopting state is a matter as to which I have no opinion.
