The California Secretary of State recently revised its Corporate Disclosure Statement (Form SI-PT) in response to the final judgments filed last year enjoining and prohibiting any expenditure of state funds on California’s board diversity laws. The Corporate Disclosure Statement, which is required to be filed annually by publicly traded corporations incorporated or qualified to do business in California within 150 days after fiscal year-end, has been revised to no longer include the board diversity questions. The California Secretary of State has also provided an update on its website noting that it “is not currently collecting data” on board diversity, and that the Corporate Disclosure Statement “has been revised to remove the four data fields which collected such data.”

How did we get here? In April 2022, a judge for the Los Angeles County Superior Court struck down AB 979, a law requiring publicly held corporations with headquarters in California to have a certain number of directors from “underrepresented communities.” In May 2022, another judge for the Los Angeles Superior Court struck down SB 826, a law requiring publicly held corporations with headquarters in California to have a certain number of female directors.[1] In both decisions, the judges ruled that the law violated the Equal Protection Clause of the California Constitution, and permanently enjoined and prohibited the Secretary of State from expending any state funds on these laws. These decisions were discussed in our previous client alerts here and here.

Following the filing of the final judgments and permanent injunctions (“final judgments”), the California Secretary of State appealed. In September 2022, the Second District Court of Appeal stayed enforcement of the final judgments (pending resolution of the state’s writ of supersedeas) to the extent that the final judgments would require the California Secretary of State to modify its procedures for and/or enjoin collecting and reporting data under the board diversity laws (the “temporary stay”). In early December 2022, the Second District Court of Appeal denied the state’s petition for writ of supersedeas and vacated the temporary stay, meaning that the permanent injunctions and prohibitions on expending funds were back in place.

Although both cases remain on appeal, the California Secretary of State is, at present, enjoined from expending state funds on these board diversity laws. The update on its website reads in its entirety as follows: 

Pursuant to the Final Judgment and Permanent Injunction (PDF) filed June 2, 2022 in the Superior Court of the State of California, County of Los Angeles, Case No. 20STCV37513 and the Final Judgment and Permanent Injunction (PDF) filed July 15, 2022 in the Superior Court of the State of California, County of Los Angeles, Case No. 19STCV27561, the Secretary of State is enjoined and prohibited from expending or causing any expenditure of the estate, funds, or other property of the State on California Corporations Code sections 301.3301.42115.5 and 2115.6 (the “Diversity on Boards” statutes). The Secretary of State’s office is not currently collecting data related to Diversity on Boards, and the Publicly Traded Disclosure Statement has been revised to remove the four data fields which collected such data. 

We are continuing to monitor developments in these cases as they remain on appeal.


[1] AB 979 is codified at California Corporations Code Section 301.4, and SB 826 is codified at California Corporations Code 301.3.