New York State Law Requires All Corporations to Report on Board Diversity

January 24, 2020

On Dec. 30, 2019, Governor Andrew M. Cuomo signed legislation requiring New York state regulators to conduct a study on the gender diversity of corporate boards operating in New York.

The new law applies to all corporations “authorized to do business” in New York.  Specifically, it requires all foreign and domestic corporations, publicly traded and privately held, to report the number of directors appointed to their board and how many directors are female.  The New York Departments of State and Taxation and Finance will jointly conduct the study.

Ultimately, the study will collect data on the number of female directors, the total number of directors on the boards in question, the change in the number of women directors compared to prior years, and the collective percentage of women directors on all such boards.  The law will take effect on June 27, 2020 and the initial study will be published by Feb. 1, 2022, with updates every four years.

Why it matters:  Board diversity has gradually been gaining traction at the state level.  New York joins California, Colorado, Illinois, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, and Washington in introducing or passing legislation or resolutions related to board diversity.  At the federal level, the U.S. House of Representatives passed the “Improving Corporate Governance Through Diversity Act of 2019” (H.R. 5084) last November.  The legislation would require certain organizations to disclose the gender, race, ethnicity, and veteran status of their board of directors, nominees, and executive officers.  The bill also requires the U.S. Securities and Exchange Commission to create a Diversity Advisory Group, which would ultimately “make recommendations of strategies that issuers could use to increase gender, racial, and ethnic diversity among board members.”