There are new developments in corporate law almost every day as political leaders try to create fair and safe markets for everyone. Sometimes, they can affect the ways companies set prices or negotiate deals. Other times, they can affect the way boards of directors are formed.
Regardless of what they do, corporate law is generally meant to improve markets. To learn more about them and how your company can follow them, keep reading below.
Corporate Law is Ensuring Diversity of Leadership
A new corporate law in California requires that corporations change their boards of directors to be equal and equitable to everyone. Before this law, lawmakers noticed that corporate power was being consolidated in specific groups of people. Most of the time, these people tend to be of a specific race, gender and sexual orientation.
Under the new law, corporations will need to achieve a certain amount of diversity in their leadership roles. Under SB 979, corporations will need to have at least one member from an underrepresented community on their board by the end of 2021.
The more leadership positions in a corporation and the larger the business, the more diversity must be on its board. Since corporations have a lot of power over people’s lives, these laws help ensure they do not hurt minority groups. It also makes sure more people have a chance to become leaders.
Race and Gender are Important Perspectives
It is important that leadership positions are not held by one specific kind of person. Nothing will ever change in it and the business will stagnate.
Lack of change can be dangerous for any kind of company. Innovation is what markets reward, not stagnation. With diverse leadership, companies will have an easier time adapting to their markets and more people can start a business.
Corporations Must Have a Certain Number of Leaders
California corporate law also specifies the number of directors a corporation needs to have. As long as there are more than three shareholders, there need to be three directors. Given the previous law discussed, one director needs to be from an underrepresented group.
However, there are no residency or age requirements for directors. Anyone can lead a company. That is the point of the new laws.
Federal Corporate Law is Changing the Tax Game
President Biden also recently signed executive action designed to ensure markets stay competitive and businesses do not grow too big. The executive action could lead to federal oversight of how prices are set across many different industries.
This action could possibly lead to corporate breakups over time as agencies create new policies. It could take months before any action is taken from these policies. Federal agencies still need time to set clear policies and follow the executive action.
Corporate Law can be Complex but it is Important
It is vital that every company follows corporate law and not just for the betterment of the country. Following corporate law also protects the company from collapsing in on itself or running out of money. It also helps companies stay competitive against other companies which is beneficial for the whole market.
There are new developments in corporate law almost every day as trials go on and legislators push for new policies.
It can also be complex and following it can be hard. For that, we are here. Just reach out to us, and we will guide you through which corporate laws affect you!