Client Brief | Illinois-Based Public Companies Required to Disclose Board Diversity in Illinois Filings by 2021
September 16, 2019 | Late last month, Illinois enacted H.B. 3394 requiring publicly traded companies headquartered in Illinois to disclose key diversity information in Illinois state filings. Required disclosures include:
- racial, ethnic and gender diversity of their boards of directors;
- how demographic diversity is considered in their processes for identifying and appointing director nominees and executive officers; and
- policies and practices for promoting diversity, equity and inclusion among the board of directors and executive officers.
Under the new law, effective August 27, 2019, reported data will be utilized to implement policy changes to address the disparity between “females and minorities versus their white male counterparts” with the goal of boosting the Illinois economy, expanding workplace opportunities for women and minorities, and ensuring Illinois’ business community is representative of its residents. The data will be reviewed, summarized and published annually by the University of Illinois System.
As soon as practical and no later than January 1, 2021, all Illinois-headquartered corporations with shares listed on a major U.S. stock exchange will have to include the following information in their annual reports filed with the Illinois Secretary of State:
- data on specific qualifications, skills and experience the corporation considers for its directors, director nominees and executive officers;
- the self-identified gender of each director;
- whether any director self-identifies as a minority person and, if so, the applicable race or ethnicity identified;
- a description of the corporation’s process for identifying and evaluating director nominees and for identifying and appointing executive officers, including whether and how demographic diversity is considered;
- a description of the corporation’s policies and practices for promoting diversity, equity and inclusion among its board of directors and executive officers.
Annual reports must be filed by January 1 of each year and will be made publicly available on the Illinois Secretary of State’s website.
The new law is the latest in a series of legislative actions across the nation designed to increase board diversity by institutional investors and shareholder advocacy groups. Publicly traded companies headquartered in Illinois should begin evaluating how they will solicit this information to maintain compliance, whether through D&O Questionnaires or other means.
For more information, please contact Geoff Morgan or Jessica Fairchild.