Making Mandates Last: Increasing Female Representation on Corporate Boards in the U.S.

A lack of female representation on corporate boards has plagued our country for decades. Until a few years ago, there was not a single state or federal regulation that required corporations to fill board seats with female directors. Instead, the federal government talked around the issue. In 2010, the SEC established an optional reporting structure for corporations to communicate their hiring practices, but did little else. With no national plan in place, many states implemented legislation that urged corporations to hire female directors. But this legislation barely moved the needle. The country needed a mandate. And in 2018, California implemented the first one – SB 826. SB 826 required each publicly held corporation with executive offices in California to place specific numbers of women on its board, depending on the board’s size. The private sector quickly followed, with institutions such as Goldman Sachs and Nasdaq announcing that in order to receive funding or list on its exchange, corporations must have at least one female director. After SB 826 was enacted, the number of women on California boards more than doubled. And many states are now using SB 826 as a model to enact similar bills. But while SB 826 saw few legal challenges overall, in May 2022, it was overturned under California’s Equal Protection Clause. Even if this decision is appealed, states looking to follow California’s lead should be cautious of another threat to such a mandate’s longevity – the internal affairs doctrine. The internal affairs doctrine is a conflict of laws principle that establishes that the state law of incorporation governs a company’s internal affairs. More than half of the corporations in the U.S. are incorporated in Delaware, leaving state statutes highly vulnerable to being rendered ineffective. It is clear that mandates work. But when mandates are put in place, they should stay in place. In this Note, I propose two alternative solutions [to the female representation problem] that would increase female participation on corporate boards. First, even if Equal Protection challenges ultimately fail, rather than relying on sporadic state statutes, stakeholders should pressure Delaware to enact a corporate code that would mandate female representation on corporate boards. Second, to circumvent Equal Protection challenges altogether, the private sector should expand its mandates to consider the number of female directors in relation to the size of each board, similarly to SB 826.