Background: Women on Corporate Boards. A corporation's board of directors is its governing body and is responsible for the oversight of the corporation and for voting on major business decisions. Board members may also perform in-depth work on standing committees such as risk assessments or audits. In many corporations, a board committee participates in succession planning and identifies potential candidates for board vacancies by recruiting, screening, and interviewing candidates.

Men hold the majority of seats on corporate boards compared to women directors. A 2018 report by Deloitte and the Alliance for Board Diversity found that women made up 25 percent of board seats at Fortune 100 companies, and 22.5 percent among Fortune 500 companies. An annual corporate directors survey by PricewaterhouseCoopers reported that as of July 2019, each company in the S&P 500 has at least one woman on its board.

Most recent state legislative action to address the issue of board diversity has been aspirational. Some states have passed nonbinding resolutions encouraging corporations to improve the diversity of their boards. In 2018, California became the first state to enact a law requiring its publicly-traded corporations to have a minimum number of women directors. Under the law, a publicly-traded California corporation must have at least one woman on its board by the end of 2019; by the end of 2021, a five-member board must have at least two women, or three women on a seven-member board. The California law authorizes the secretary of state to fine non-compliant corporations. The California law faces two constitutionally-based court challenges. In 2019, Illinois enacted a law requiring expanded corporate board demographics reporting to the secretary of state including mandatory reporting of board member selection criteria.

Washington Business Corporations Act Revisions. The WBCA is closely based on the American Bar Association's Revised Model Business Corporation Act (Model Act). Washington is a Model Act state, making it easier to find persuasive authority on interpretive issues that Washington's court have not addressed, and easier to keep up with future developments in the law. The WBCA provides requirements for creating, organizing, and operating corporations and the relationship between shareholders, directors, and officers of the corporation. Many of the provisions of the WBCA provide default rules that may be altered in the corporation's articles of incorporation or bylaws. The articles of incorporation and the bylaws are the governing documents for the corporation and set forth rules about numerous organizational and operational issues. The Corporate Act Revision Committee (CARC) of the Business Law Section of the Washington State Bar Association periodically reviews and makes recommendations for updates to the WBCA to keep it up to date with developments in the law and changes made to the Model Act, and to corporate law in other states.

The American Bar Association adopted a new version of the Model Act in 2016. The CARC proposes periodic changes to the WBCA for consistency with the 2016 Model Act and to keep the law current with changes to corporate law.

Summary: Women on Corporate Boards. Each public company must have a gender-diverse board of directors or comply with specific requirements no later than January 1, 2022. If the company does not have a gender-diverse board, it must deliver a board diversity discussion and analysis to its shareholders. The discussion and analysis must include information about the company's approach to developing and maintaining diversity on its board including:

representation of diverse groups when identifying and nominating board candidates;
any policies adopted to identify and nominate members of any diverse groups as board candidates; and
mechanisms to refresh the board such as term limits or mandatory retirement of board members.

The requirement to deliver the discussion and analysis may be satisfied by posting the information on the company's primary website or including the required information in a proxy statement filed under specific federal regulations. A public company is exempt from the requirements if:

it does not have outstanding shares of any class or series listed on a U.S. national securities exchange;
it is an emerging growth company or a smaller reporting company as defined in federal regulations;
more than 50 percent shares representing the voting power of the company are held by a person or a group of persons;
the company's articles of incorporation authorize election of all or a specific number of directors by one or more separate voting groups; or
state or federal law does not require the company to hold an annual shareholders meeting.

Corporate actions are not invalidated because of a company's failure to comply with the requirements. The exclusive remedy for failing to comply is for shareholders to seek a superior court order to deliver the required information to the shareholders.

Washington Business Corporations Act Revisions. The list of optional and default provisions in the articles of incorporation and by-laws is removed. The requirement for stating the number of directors, or how the number of directors is determined in the articles of incorporation or by-laws is relocated within the WBCA. A corporation is permitted to include terms in its articles of incorporation made dependent on facts objectively ascertainable outside the articles. The same applies to plans for the terms of shares, the terms of a merger, and the terms of a share exchange The phrase "facts objectively ascertainable outside a filed record or plan" is defined by standards and limitations for using this practice. A corporation cannot vote its shares whether they are owned by or otherwise belong to the corporation or by the corporation's controlled subsidiary. Shareholders of publicly-traded or privately-held Washington corporations may approve a corporate action by less than unanimous written consent if the articles of incorporation include this method for approval, except for electing directors where cumulative voting applies. Failure to comply with the the notice requirements for seeking and obtaining shareholder consent will not invalidate the shareholder approval obtained by the consent.

Senate	32	14
House	56	40