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California Law Mandates Women on Corporate Boards

California has become the first state in the country to mandate that women be included on the board of directors of publicly traded companies.

Governor Jerry Brown on Sunday signed into law that every California-based corporation should have at least one woman on its board of directors by the end of next year.

By the end of 2021, a board of directors with five members will be required to have at least two female members and larger boards will require three or more.

“One-fourth of California’s publicly traded companies still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive,”Senator Hannah-Beth Jackson, the bill’s author, told The Wall Street Journal.

Jackson said the companies, despite being urged to add women to their boards, have done nothing to increase the numbers, making government intervention necessary.

Brown said it might be difficult to enforce the law. “Nevertheless, recent events in Washington, D.C. – and beyond – make it crystal clear that many are not getting the message,” he said.

The law mandates that companies that ignore the issue can be fined $100,000 for a first violation and $300,000 for subsequent violations. Companies also must inform the California secretary of state of the gender representation on their boards. If they fail to report, they would face another $100,000 fine.

Some European countries already mandate female representation on company boards. The European Commission is pushing for that quota to be as high as 40 percent.

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