Update
Pursuant to the Final Judgment and Permanent Injunction (PDF) filed June 2, 2022 in the Superior Court of the State of California, County of Los Angeles, Case No. 20STCV37513 and the Final Judgment and Permanent Injunction (PDF) filed July 15, 2022 in the Superior Court of the State of California, County of Los Angeles, Case No. 19STCV27561, the Secretary of State is enjoined and prohibited from expending or causing any expenditure of the estate, funds, or other property of the State on California Corporations Code sections 301.3, 301.4, 2115.5 and 2115.6 (the "Diversity on Boards" statutes). The Secretary of State's office is not currently collecting data related to Diversity on Boards, and the Publicly Traded Disclosure Statement has been revised to remove the four data fields which collected such data.
Which corporations are required to comply with the Underrepresented Communities on Boards requirements?
The minimum requirements for directors from underrepresented communities apply to all publicly held California and foreign corporations. A publicly held corporation can report compliance with the statutory requirements through its annual Publicly Traded Corporate Disclosure Statement filed with the California Secretary of State.
Corporations that are publicly traded but are not publicly held are not required to meet the minimum requirements for directors from underrepresented communities. However, publicly traded corporations still are required to file an annual Publicly Traded Corporate Disclosure Statement and may voluntarily disclose information regarding board diversity.
What is the difference between a "publicly traded" corporation and a "publicly held" corporation?
Publicly held corporations are a subset of publicly traded corporations.
- “Publicly Held” corporations are corporations with shares listed on the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ), or the NYSE American (formerly known as the American Stock Exchange or AMEX).
- “Publicly Traded” corporations are corporations with securities listed on the NYSE, NASDAQ, NYSE American, the OTC Bulletin Board, or on the electronic service operated by OTC Markets Group Inc.
| Market / Exchange | Publicly Held Corporations | Publicly Traded Corporations |
|---|---|---|
| NYSE | ✔ | ✔ |
| NASDAQ | ✔ | ✔ |
| NYSE American | ✔ | ✔ |
| OTC Markets Group Inc. | ✔ | |
| OTC Bulletin Board | ✔ |
What are the current requirements for Underrepresented Communities on Boards?
Effective January 1, 2021, Corporations Code sections 301.4 and 2115.6 require publicly held corporations with a principal executive office in California to have a minimum number of directors from underrepresented communities on their Boards of Directors. (Statutes of 2020, Chapter 954, [AB 979, Holden].)
All publicly held corporations with a principal executive office located in California must have at least one director from an underrepresented community on their Board of Directors by December 31, 2021.
Are there any additional Underrepresented Communities on Boards requirements that apply after 2021?
Yes. By December 31, 2022, all publicly held corporations with a principal executive office located in California must have a minimum number of directors from underrepresented communities based on the total number of directors on their Board of Directors as follows:
| Total Number of Directors | Minimum Directors from Underrepresented Communities Required by end of 2021 | Minimum Directors from Underrepresented Communities Required by end of 2022 |
|---|---|---|
| 4 or fewer | 1 | 1 |
| 5-8 | 1 | 2 |
| 9 or more | 1 | 3 |
Who qualifies as a director from an underrepresented community?
A director from an underrepresented community is an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.
Can a director satisfy both the Women on Boards requirement and the Underrepresented Communities on Boards requirement?
A single director who self-identifies as both female and from an underrepresented community, each as defined by statute, can satisfy both Women on Boards and Underrepresented Communities on Boards statutory requirements.
How does the Secretary of State determine compliance with Underrepresented Communities on Boards?
Compliance is determined from publicly held corporations reporting compliance through their annual Publicly Traded Corporate Disclosure Statement filed with the California Secretary of State.
Which corporations are required to file the Publicly Traded Corporate Disclosure Statement?
A corporation with securities traded on the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ), the NYSE American, (formerly known as the American Stock Exchange or AMEX), the OTC Bulletin Board, or on the electronic service operated by OTC Markets Group Inc. is a “publicly traded” corporation and is required to file a new Statement annually with the Secretary of State within 150 days of the end of its fiscal year. (Corporations Code sections 1502.1 and 2117.1.)
How does a corporation file a Publicly Traded Corporate Disclosure Statement?
The Publicly Traded Corporate Disclosure Statement form, including instructions for completing the form, is available on the Secretary of State’s website at https://bpd.cdn.sos.ca.gov/corp/pdf/so/siptsupp.pdf or through our bizfile California portal at https://www.sos.ca.gov/business-programs/bizfile Once completed, this form may be submitted for filing online through the Secretary of State’s eFile Online tool. Instructions for submitting are included with the online form.
Are all foreign corporations required to register with the California Secretary of State?
All foreign corporations transacting intrastate business in California are required to register with the Secretary of State prior to conducting business. (Corporations Code section 2105.) Foreign corporations wishing to register can complete a Statement and Designation by Foreign Corporation and submit the completed form, including the required certificate of good standing from their home jurisdiction, along with the applicable fees, to the Secretary of State's office. This form may be submitted for filing online through the Secretary of State’s new eFile Online tool. Instructions for submitting are included with the online form.
When will the Secretary of State’s office publish reports for Underrepresented Communities on Boards?
The Secretary of State’s office will publish its inaugural report on Underrepresented Communities on Boards by March 1, 2022. The March 2022 report will present data collected from 2021 Securities and Exchange Commission filings as well as 2021 Publicly Traded Corporate Disclosure Statement filings with the Secretary of State. Thereafter, as required by Corporations Code section 301.4(c), the Secretary of State will publish an annual report on Underrepresented Communities on Boards no later than March 1st of each year.
How do I find more information about the corporations listed in the Secretary of State reports?
The Secretary of State reports are generated from data provided by publicly traded corporations in two separate annual disclosure filings:
- Publicly Traded Corporate Disclosure Statement: a corporation’s California filing with the Secretary of State’s office, available to the public for free on the Secretary of State's website through the Business Search. Also, an abstract of the information contained in the filed Publicly Traded Corporate Disclosure Statements is available on the Secretary of State's website in a searchable database through the Publicly Traded Corporate Disclosure Search.
- SEC Form 10-K: a corporation’s federal filing with the United States Securities and Exchange Commission (SEC), available to the public for free through the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Company Filings Search.
For information on ordering copies of official California business entity records for a particular corporation, please refer to the Information Requests webpage.
