There will be more women on the boards of Washington state corporations if a bill passed by the state legislature this week succeeds in nudging corporations toward gender diversity by imposing transparency requirements.
The bill (SSB 6037) mandates that each public company must have a gender-diverse board of directors by Jan. 1, 2022. Gender diversity is defined as “individuals who self-identify as women,” and they must comprise at least 25% of the board.
Companies without gender-diverse boards must provide a discussion and analysis to shareholders that includes information on how they approach developing and maintaining diversity; mechanisms to promote diversity, such as term limits for directors or mandatory retirement; and policies adopted to identify and nominate diverse candidates as directors.
If the corporation fails to provide a diversity discussion and analysis, any voting shareholder may seek a Superior Court order requiring the company to provide the information.
California in 2018 became the first state to mandate that publicly traded corporations have at least one woman on their boards by the end of 2019 and two women on a five-member board or three women on a seven-member board by the end of 2021, according to a legislative staff analysis of the bill. Noncomplaint companies may be fined by the California secretary of state.
In Washington state, the diversity measure was requested by the Washington State Bar Association. It passed the Senate Jan. 24 by a vote of 31 to 14, and the House March 3, 56 to 40. The bill now heads to Gov.