California has become the first state requiring publicly traded companies to include women on their boards of directors.
Gov. Jerry Brown, a Democrat, on Sunday signed bill SB 826 into law, which mandates that each public corporate board in the state include at least one woman by the end of 2019. This requirement would grow to two for five-member boards and three for corporations with at least six board members by 2021.
“I don't minimize the potential flaws that indeed may prove fatal to its ultimate implementation,” Brown wrote in a signing statement. “Nevertheless, recent events in Washington, D.C. – and beyond – make it crystal clear that many are not getting the message.”
State Sen. Hannah-Beth Jackson, the bill’s author, said it’s important for businesses to have perspectives from women – and time to “blow that glass ceiling up.”
Companies can be fined $100,000 for the first violation and $300,000 for subsequent violations. The legislation also requires companies report their board compositions to the California secretary of state and will impose a $100,000 fine if the company breaks that rule.
While many major companies in the Bay Area already meet the minimum requirements, some do not.
Airbnb, which could go public next year, expanded its board to seven members and added its first woman last month. Ann Mather, the new member and a former chief financial officer at Pixar, also serves on the boards of Alphabet and Netflix, among other firms.
Of the 467 publicly traded California companies in the Russell 3000 index, female directors hold 546 seats — 15.8 percent of the 3,445 total seats on boards of directors, according to Bloomberg.
The California Chamber of Commerce opposes the bill, as do a number of other trade groups, including the California Grocers Association, California Restaurant Association, California Trucking Association and California Manufacturers & Technology Association.
The California manufacturers group said it understood the intent of the legislation, but not the manner in which it would be conducted.
The California Chamber of Commerce did not immediately return FOX Business’ request for comment at the time of publication.
FOX Business' Matthew Kazin and The Associated Press contributed to this report
This story was originally published on Aug. 29