Changes to California Corporate Law

California corporate law is constantly evolving to keep up with the changing business landscape in the state. In this blog post, we will discuss some of the latest developments in California corporate law.

1.     Electronic Signatures: In September 2020, the California legislature passed a bill allowing the use of electronic signatures for most corporate documents, including bylaws, shareholder agreements, and consents. This change will help businesses operate more efficiently, particularly during the COVID-19 pandemic, where many employees are working remotely.

2.     Board Diversity: California has passed several laws mandating board diversity for publicly traded companies headquartered in the state. In 2018, the legislature passed a law requiring publicly traded companies to have at least one woman on their board by the end of 2019. In 2020, a new law required companies to have at least one director from an underrepresented community by the end of 2021.

3.     Benefit Corporations: Benefit corporations are for-profit companies that also have a social or environmental mission. In California, benefit corporations must have a stated purpose to create a public benefit, and they are required to file an annual report on their social and environmental performance.

4.     Virtual Shareholder Meetings: In response to the COVID-19 pandemic, California Governor Gavin Newsom issued an executive order allowing public corporations to hold virtual shareholder meetings. The order applies to meetings held between March 1, 2020, and June 30, 2021. It is not yet clear whether this will become a permanent change.

5.     Independent Contractors: California has passed several laws in recent years aimed at reclassifying many independent contractors as employees, particularly in the gig economy. This includes the landmark AB 5 bill passed in 2019, which established a three-part test for determining whether a worker is an employee or an independent contractor.

In conclusion, California corporate law is constantly evolving, and businesses operating in the state must stay up-to-date with the latest developments to ensure compliance and stay competitive. The changes discussed above reflect a growing emphasis on social responsibility, technology, and flexibility in the state's corporate landscape.