Board Diversity Bill Becomes Law

On August 27, 2019, Governor Pritzker signed a board diversity bill in a push to improve the representation of minorities and women on board of directors.  The bill, titled HB3394, is an amendment to the Business Corporation Act of 1983.  Originally, the bill established a quota for the number of female and African American directors required on a corporation’s board of directors.  However, these quotas have been removed from the bill.  Instead, the bill’s goal is to gather data on the diversity of corporate boards.

Data Reporting Requirements

To achieve these goals, the board diversity bill imposes new reporting requirements commencing January 1, 2021.  The new requirements include:

1. the specific qualifications, skills and experience the corporation considers for its board of directors, nominees and executive officers;
2. the self-identified gender of each director;
3. whether a director self-identifies as a minority person and, if so, which race or ethnicity to which the director belongs;
4. a description of the corporation’s process for identifying and evaluating nominees for the board of directors, including whether and, if so, how demographic diversity is considered;
5. a description of the corporation’s process for identifying and appointing executive officers, including whether and, if so, how demographic diversity is considered; and
6. a description of the corporation’s policies and practices for promoting diversity, equity, and inclusion among its board of directors and executive officers.

The above information must be submitted along with each business corporation’s annual report.  The Secretary of State will make this information publicly available.

Rating Based on Diversity and Inclusion

Finally, the University of Illinois will review the data on the demographic composition of boards.  It will publish a report with its conclusions, including strategies for promoting diversity and inclusion.  As a result of this process, corporations will be rated based on their board’s diversity and inclusion.

The complete text of the board diversity bill may be viewed here.