Sep 25, 2020 - Economy & Business

SPACs are largely complying with California's board gender rules

Illustration of a female symbol with a blank check texture overlaid.
Illustration: Aïda Amer/Axios

Nearly all SPACs based in California have at least one woman on their boards, complying with a new state law.

Why it matters: Access to opportunities for wealth generation can help close the gender gap.

The big picture: SPACs are publicly-traded shell companies that acquire a business for the purpose of taking them public. They've been around for years, but have proliferated in 2020.

By the numbers: Only five out of 26 California-based SPACs trading on the market do not currently have a woman on their board.

  • Sixteen have just one women on their boards, four of them have two, and one (Panacea Acquisition Corp.) has three.
  • A number of newly-formed SPACs are still missing women directors, per SEC filings, although they haven't yet hit the public markets.

The law does not have transition provisions for companies planning to go public, but it only requires a female director "for at least a portion of the year." Enforcement is based on 10-K forms, giving companies more wiggle room to fulfill the requirement.

  • "A lot of these deals go from the organization meeting to closing in eight to 10 weeks," points out lawyer Jocelyn Arel, a partner Goodwin who specializes in SPACs, adding that often new board members are added subsequently.
  • The law is also facing a couple of ongoing lawsuits.

The bigger picture: Other states are already following suit, with Washington passing a bill earlier this year and Massachusetts considering similar legislation.

  • California lawmakers also recently passed a bill that would require publicly-held companies to add board members from other underrepresented groups, such as Black, Latino, Asian, Native American, and LGBTQ. Gov. Newson has until Sept. 30 to make a decision.

Go deeper: California's "woman quota" law seems to be working

Go deeper