California has signed off on a bill that will require major tech companies to have a representative number of woman on their boards.
Signed off by Governor Jerry Brown on Sunday, Senate Bill No. 826 will make it mandatory for all publicly held corporations that are headquartered in California to have at least one woman on their board by the end of 2019.
Additionally, there are further requirements coming by the end of July 2021 for larger companies. A minimum of two women will be required on a board of five, and a minimum of three on a board of six or more.
“Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the 'persons' in America,” said Brown.
Companies that fail to meet the requirements will face fines of $US100,000 for the first violation and $US300,000 for any subsequent offence.
“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,” said state senator Hannah-Beth Jackson, prior to the Bill being signed.
With California’s Silicon Valley currently home to the likes of Apple, Facebook, and Google's parent company Alphabet, it is the tech sector that could be the most impacted by the latest move.
Facebook’s current Board of Directors only has two female representatives out of a total of nine, meaning a rejig is required by the end of 2021.
Twitter will not require any mandatory action at this stage, with four of 11 of its board members being women.
Airbnb only last month appointed its first ever female board member.
While most of these tech heavyweights are either close to or already compliant with the new requirements, the changes are likely to throw smaller tech companies and start-ups into action.
There are 8,339 companies classified as start-ups in California on job site AngelList.
The 2017 State of Startups report found that of the 869 founders surveyed, 59.5% had all-male boards. Another 22.4% had “mostly male” boards.
However, it is difficult to predict what the full extent of these changes will be as they will only apply to start-ups which are publicly listed.
When a similar initiative was introduced in Norway in 2008, it led to a number of companies delisting rather than complying.