Todd Henderson on the Proposal to Require Corporate Board Diversity
Controversial Proposal Would Require Corporate Board Diversity
After a bitter debate on the floor of the Illinois House in March, state Rep. Emanuel “Chris” Welch’s bill passed. It requires public companies headquartered in Illinois to have at least one woman and one African American on their boards of directors.
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But one scholar says this bill won’t stand up in the courts. “It’s illegal in a lot of ways,” said Todd Henderson, a professor of law at the University of Chicago Law School who co-wrote the book “Outsourcing the Board: How Board Service Providers Can Improve Corporate Governance.” “The first way is that the general rule in the United States is that states get to write corporate law rules for companies that are incorporated there not where they have their headquarters.”
“The other way that it’s illegal is it’s racial discrimination,” Henderson said. “It’s very easy to prove that you violate Title 7 or this constitutional standard of equal protection if a state requires you to do it. And this [Supreme] Court would strike it down as a racial quota -- especially this 5 to 4 conservative court with Justice Kavanuagh.”
“So it’s illegal both in a corporate law sense and also in a race quota sense,” he said.
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