NY State Senate Bill 2019-S4011

Senate Bill S4011

2019-2020 Legislative Session

Relates to the number of female directors required to serve on the board of directors of certain publicly traded corporations

download bill text pdf

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to corporations, authorities and commissions
Feb 25, 2019	referred to corporations, authorities and commissions

2019-S4011 (ACTIVE) - Details

Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Business Corporation Law
Laws Affected:: Add §702-a, amd §1319, BC L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S4831
2023-2024: S2916

2019-S4011 (ACTIVE) - Summary

Relates to the number of female directors required to serve on the board of directors of publicly traded domestic and authorized foreign corporations whose principal executive office according to the corporation's Form 10-K filed with the Securities and Exchange Commission is located within New York state; requires any such corporation to have a minimum of one female director on its board no later than December 31, 2020 and sets higher requirements to be implemented no later than December 31, 2023; requires corporations to report certain compliance information to the secretary of state and the secretary of state to disclose certain related information to the public via its website.

2019-S4011 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S4011

SPONSOR: CARLUCCI
 
TITLE OF BILL:

An act to amend the business corporation law, in relation to the number
of female directors required to serve on the board of directors of
certain publicly held corporations

 
PURPOSE:

This bill requires publicly held domestic and foreign corporations based
in New York to appoint women to their boards of directors, in order to
increase gender diversity in corporate governing roles.

 
SUMMARY OF PROVISIONS:

Section 1 adds a new section 702-a to the business corporation law stat-
ing no later than December 31, 2023, a publicly held domestic or foreign
corporation whose principal executive office is located within this
state shall comply, as applicable, with the following:

A. For a corporation with six or more directors, at least three female
directors shall serve on its board.

B. For a corporation with five directors, at least two female directors
shall serve on its board.

C. For a corporation with four directors or less, at least one female
director shall serve on its board.

Section 2 is the effective date.

 
JUSTIFICATION:

This bill requires publicly held domestic and foreign corporations based
in New York to appoint women to their boards of directors, in order to
increase gender diversity in corporate governing roles.  Research indi-
cates that women serving on boards of directors of publicly held corpo-
rations will boost the economy, improve opportunities for women in the
workplace, and improve the performance and protect the value of corpo-
rations for shareholders and stockholders, including retirees.

Under the bill, a publicly held domestic or foreign corporation whose
principal executive office is located in this State would be required to
have a minimum of one female director on its board by December 31, 2020.
Additionally, by December 31, 2023 a publicly held domestic or foreign
corporation located in this State would be required to have a minimum
of: one female director if the corporation has four or fewer directors;
two female directors if the corporation has five directors; and at least
three female directors if the corporation has six or more directors. To
determine compliance with this requirement, the bill requires a corpo-
ration to file with the Secretary of State a list of all of its direc-
tors and their terms of service and identify the number of directors
that are female.

The bill provides that a corporation that violates the bill is subject
to the following penalties: $100,000 for a first violation and $300,000
for a subsequent violation for each director seat required to be held by
a female which is not held by a female during at least a portion of a
calendar year; and $100,000 for failure to file board member information
with the Secretary of State in a timely manner.  Any fine collected
would be used by the Secretary of State to offset the cost of adminis-
tering the bill's provisions.

Additionally, the bill requires the Secretary of State to report, by
July 1, 2020, the number of publicly held domestic and foreign corpo-
rations in this State and the number of female directors on each corpo-
ration's board. By March 1, 2021, and annually thereafter, the Secretary
of State would report: (1) a list of corporations subject to, and in
compliance with, the requirements of this bill; (2) the number of
publicly held domestic and foreign corporations that moved their United
States headquarters to New York from another state or from New York to
another state; and (3) the number of corporations that were subject to
the bill's provisions during the preceding year, but are no longer
publicly traded.

This bill is similar to a California law to increase the gender diversi-
ty of corporate leadership, by requiring California-based publicly held
corporations to appoint women to their boards of directors. Other coun-
tries have also addressed the lack of gender diversity on corporate
boards by instituting quotas mandating 30 to 40 percent of seats to be
held by women directors, including in Norway, which since 2003 requires
40 percent female representation on corporate boards, and many other
European nations, such as France, Germany, Iceland, the Netherlands, and
Spain.

 
LEGISLATIVE HISTORY:

New Legislation

 
FISCAL IMPLICATIONS:

None to state.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S4011 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4011
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             February 25, 2019
                                ___________
 
 Introduced  by Sen. CARLUCCI -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN  ACT to amend the business corporation law, in relation to the number
   of female directors required to serve on the  board  of  directors  of
   certain publicly held corporations

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The business corporation law is amended  by  adding  a  new
 section 702-a to read as follows:
 § 702-A. APPOINTMENT OF FEMALE DIRECTORS.
   (A)  DEFINITIONS.  FOR  PURPOSES  OF THIS SECTION, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   (1) "FEMALE" MEANS AN INDIVIDUAL WHO SELF-IDENTIFIES HER GENDER  AS  A
 WOMAN, WITHOUT REGARD TO THE INDIVIDUAL'S DESIGNATED SEX AT BIRTH.
   (2)  "PRINCIPAL EXECUTIVE OFFICE" MEANS THE PRINCIPAL EXECUTIVE OFFICE
 ACCORDING TO THE CORPORATION'S FORM 10-K FILED WITH THE  SECURITIES  AND
 EXCHANGE COMMISSION.
   (3)  "PUBLICLY  HELD DOMESTIC OR FOREIGN CORPORATION" MEANS A DOMESTIC
 CORPORATION OR AN AUTHORIZED FOREIGN  CORPORATION,  AS  SUCH  TERMS  ARE
 DEFINED  IN  SUBPARAGRAPHS  (A)  (4)  AND  (A) (7) OF SECTION 102 (DEFI-
 NITIONS), RESPECTIVELY, WITH OUTSTANDING SHARES  LISTED  ON  A  NATIONAL
 SECURITIES EXCHANGE.
   (B)(1)  NO  LATER  THAN DECEMBER 31, 2020, A PUBLICLY HELD DOMESTIC OR
 FOREIGN CORPORATION WHOSE PRINCIPAL EXECUTIVE OFFICE IS  LOCATED  WITHIN
 THIS  STATE  SHALL HAVE A MINIMUM OF ONE FEMALE DIRECTOR ON ITS BOARD. A
 CORPORATION SUBJECT TO THIS SECTION MAY INCREASE THE NUMBER OF DIRECTORS
 ON ITS BOARD, PURSUANT TO SECTION 702 (NUMBER OF DIRECTORS),  TO  COMPLY
 WITH THIS SECTION.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10051-01-9

 S. 4011                             2
 
   (2)  NO  LATER  THAN  DECEMBER  31,  2023, A PUBLICLY HELD DOMESTIC OR
 FOREIGN CORPORATION WHOSE PRINCIPAL EXECUTIVE OFFICE IS  LOCATED  WITHIN
 THIS STATE SHALL COMPLY, AS APPLICABLE, WITH THE FOLLOWING:
   A. FOR A CORPORATION WITH SIX OR MORE DIRECTORS, AT LEAST THREE FEMALE
 DIRECTORS SHALL SERVE ON ITS BOARD.
   B.  FOR  A CORPORATION WITH FIVE DIRECTORS, AT LEAST TWO FEMALE DIREC-
 TORS SHALL SERVE ON ITS BOARD.
   C. FOR A CORPORATION WITH FOUR DIRECTORS OR LESS, AT LEAST ONE  FEMALE
 DIRECTOR SHALL SERVE ON ITS BOARD.
   (3)  A  PUBLICLY  HELD DOMESTIC OR FOREIGN CORPORATION WHOSE PRINCIPAL
 EXECUTIVE OFFICE IS LOCATED WITHIN THIS STATE SHALL FILE WITH THE SECRE-
 TARY OF STATE, ON AN ANNUAL BASIS, A LIST  OF  ALL  DIRECTORS  AND  EACH
 DIRECTOR'S  TERM  OF  SERVICE,  AND  SHALL IDENTIFY THE NUMBER OF FEMALE
 DIRECTORS SERVING ON THE BOARD.
   (C) NO LATER THAN JULY 1, 2020, THE SECRETARY OF STATE SHALL PUBLISH A
 REPORT ON ITS WEBSITE DOCUMENTING THE NUMBER  OF  DOMESTIC  AND  FOREIGN
 CORPORATIONS  WHOSE  PRINCIPAL EXECUTIVE OFFICE IS LOCATED IN THIS STATE
 AND THE NUMBER OF FEMALE DIRECTORS ON EACH CORPORATION'S BOARD.
   (D) NO LATER THAN MARCH 1, 2021, AND ON AN  ANNUAL  BASIS  THEREAFTER,
 THE  SECRETARY OF STATE SHALL PUBLISH A REPORT ON ITS WEBSITE REGARDING,
 AT MINIMUM, ALL OF THE FOLLOWING:
   (1) THE NUMBER OF CORPORATIONS SUBJECT TO THIS SECTION  THAT  WERE  IN
 COMPLIANCE  WITH  THE  REQUIREMENTS  OF  THIS  SECTION DURING AT LEAST A
 PORTION OF THE PRECEDING CALENDAR YEAR;
   (2) THE NUMBER OF PUBLICLY HELD CORPORATIONS THAT MOVED  THEIR  UNITED
 STATES  HEADQUARTERS  TO  NEW YORK FROM ANOTHER STATE OR OUT OF NEW YORK
 INTO ANOTHER STATE DURING THE PRECEDING CALENDAR YEAR; AND
   (3) THE NUMBER OF PUBLICLY HELD DOMESTIC OR FOREIGN CORPORATIONS  THAT
 WERE SUBJECT TO THIS SECTION DURING THE PRECEDING YEAR, BUT ARE NO LONG-
 ER PUBLICLY TRADED.
   (E)  THE  SECRETARY OF STATE MAY ADOPT RULES AND REGULATIONS TO IMPLE-
 MENT  THIS  SECTION.  THE  SECRETARY  OF  STATE  MAY  IMPOSE  FINES  FOR
 VIOLATIONS OF THIS SECTION AS FOLLOWS:
   (1) FOR EACH DIRECTOR SEAT REQUIRED TO BE HELD BY A FEMALE PURSUANT TO
 SUBPARAGRAPHS (B) (1) OR (B) (2) OF THIS SECTION, WHICH IS NOT HELD BY A
 FEMALE DURING AT LEAST A PORTION OF A CALENDAR YEAR, A CORPORATION SHALL
 BE  SUBJECT  TO  A  CIVIL  PENALTY OF ONE HUNDRED THOUSAND DOLLARS FOR A
 FIRST VIOLATION AND THREE HUNDRED THOUSAND DOLLARS FOR  EACH  SUBSEQUENT
 VIOLATION. FOR PURPOSES OF THIS SUBPARAGRAPH, A FEMALE DIRECTOR WHO HELD
 A  DIRECTOR  SEAT  FOR  AT  LEAST  A  PORTION OF THE YEAR SHALL NOT BE A
 VIOLATION.
   (2) FAILURE TO FILE BOARD MEMBER INFORMATION IN A TIMELY  MANNER  WITH
 THE SECRETARY OF STATE PURSUANT TO SUBPARAGRAPH (B) (3) OF THIS SECTION,
 A  CORPORATION  SHALL BE SUBJECT TO A CIVIL PENALTY OF ONE HUNDRED THOU-
 SAND DOLLARS.
   (3) ANY FINE COLLECTED BY THE SECRETARY  OF  STATE  PURSUANT  TO  THIS
 SECTION  SHALL  BE  USED BY THE SECRETARY OF STATE TO OFFSET THE COST OF
 ADMINISTERING THIS SECTION.
   § 2. Paragraph (a) of section 1319 of the business corporation law  is
 amended by adding a new subparagraph 4-a to read as follows:
   (4-A) SECTION 702-A (APPOINTMENT OF FEMALE DIRECTORS).
   § 3. This act shall take effect immediately.

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