HOUSE BILL 599
54th legislature - STATE OF NEW MEXICO - first session, 2019
INTRODUCED BY
Karen C. Bash and Christine Trujillo and Joy Garratt
AN ACT
RELATING TO CORPORATIONS; REQUIRING CORPORATIONS TO APPOINT A CERTAIN NUMBER OF WOMEN AS DIRECTORS; ADDING A REPORTING REQUIREMENT; PROVIDING PENALTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 53-8-18 NMSA 1978 (being Laws 1975, Chapter 217, Section 18, as amended) is amended to read:
"53-8-18. NUMBER AND ELECTION OF DIRECTORS.--
A. The number of directors of a corporation shall be not less than three. Subject to that limitation, the number of directors shall be fixed by, or determined in the manner provided in, the articles of incorporation or the bylaws. The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws, unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment of the articles of incorporation. No decrease in number shall have the effect of shortening the term of any incumbent director. If the number of directors is not fixed by, or determined in a manner provided in, the articles of incorporation or the bylaws, the number shall be the same as that stated in the articles of incorporation.
B. The board of directors of each domestic corporation shall be composed of at least:
(1) one female director if the number of directors is four or fewer;
(2) two female directors if the number of directors is five; and
(3) three female directors if the number of directors is six or more.
[B.] C. The directors constituting the first board of directors shall be named in the articles of incorporation and shall hold office until the first annual election of directors or for such other period as may be specified in the articles of incorporation or the bylaws. Thereafter, directors shall be elected or appointed in the manner and for the terms provided in the articles of incorporation or the bylaws. In the absence of a provision fixing the term of office, the term of office of a director shall be one year.
[C.] D. Directors may be divided into classes and the terms of office of the several classes need not be uniform. Each director shall hold office for the term for which [he] the director is elected or appointed and until [his] the director's successor is elected or appointed and qualified.
[D.] E. A director may be removed from office pursuant to any procedure provided in the articles of incorporation or the bylaws."
SECTION 2. A new section of the Nonprofit Corporation Act is enacted to read:
"[NEW MATERIAL] FAILURE TO APPOINT AND MAINTAIN WOMEN ON BOARD OF DIRECTORS--PENALTIES.--
A. If a domestic corporation fails to appoint or maintain the required number of female directors, the secretary of state shall notify the corporation of its delinquency by letter to the corporation's principal office.
B. If a domestic corporation does not correct a delinquency within sixty days from the date the letter is mailed, the secretary of state may impose the following administrative penalties:
(1) for a first violation, an amount not to exceed five thousand dollars ($5,000); and
(2) for a second or subsequent violation, an amount not to exceed ten thousand dollars ($10,000).
C. Appeals from decisions of the secretary of state regarding the assessment of an administrative penalty shall be to the district court pursuant to the provisions of Section 39-3-1.1 NMSA 1978."
SECTION 3. Section 53-11-36 NMSA 1978 (being Laws 1967, Chapter 81, Section 35, as amended) is amended to read:
"53-11-36. NUMBER AND ELECTION OF DIRECTORS.--
A. The number of directors of a corporation shall consist of one or more members. The number of directors shall be fixed by, or in the manner provided in, the articles of incorporation or the bylaws. The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws, but no decrease shall have the effect of shortening the term of any incumbent director. If the number of directors is not fixed by, or in the manner provided in, the bylaws or the articles of incorporation, the number shall be the same as the number of directors constituting the initial board of directors.
B. The board of directors of each domestic corporation shall be composed of at least:
(1) one female director if the number of directors is four or fewer;
(2) two female directors if the number of directors is five; and
(3) three female directors if the number of directors is six or more.
C. The names and addresses of the members of the first board of directors shall be stated in the articles of incorporation. Such persons shall hold office until the first annual meeting of shareholders and until their successors have been elected and qualified. At the first annual meeting of shareholders and at each annual meeting thereafter, the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in case of the classification of directors as permitted by the Business Corporation Act. Each director shall hold office for the term for which the director is elected and until a successor has been elected and qualified."
SECTION 4. A new section of the Business Corporation Act is enacted to read:
"[NEW MATERIAL] FAILURE TO APPOINT AND MAINTAIN WOMEN ON BOARDS OF DIRECTORS--PENALTIES.--
A. If a domestic corporation fails to appoint or maintain the required number of female directors, the secretary of state shall notify the corporation of its delinquency by letter to the corporation's principal office.
B. If a domestic corporation does not correct a delinquency within sixty days from the date the letter is mailed, the secretary of state may impose the following administrative penalties:
(1) for a first violation, an amount not to exceed five thousand dollars ($5,000); and
(2) for a second or subsequent violation, an amount not to exceed ten thousand dollars ($10,000).
C. Appeals from decisions of the secretary of state regarding the assessment of an administrative penalty shall be to the district court pursuant to the provisions of Section 39-3-1.1 NMSA 1978."
SECTION 5. Section 53-2-4 NMSA 1978 (being Laws 1905, Chapter 79, Section 123, as amended) is amended to read:
"53-2-4. CORPORATIONS--COMPILATION.--The [public regulation commission] secretary of state shall compile annually from the records of [its] the secretary of state's office a complete list, in alphabetical order, of:
A. the original and amended certificates of incorporation filed during the preceding year, together with:
(1) the location of the principal office in this state of the corporations affected;
(2) the name of the agent in charge;
(3) the amount of the authorized capital stock;
(4) the amount of stock with which business is to be commenced; and
(5) the date of filing the certificate and the period for which the corporation is to continue;
B. each domestic corporation organized pursuant to the Nonprofit Corporation Act that failed to appoint or maintain the required number of female directors required pursuant to Section 53-8-18 NMSA 1978; and
C. each domestic corporation organized pursuant to the Business Corporation Act that failed to appoint or maintain the required number of female directors required pursuant to Section 53-11-36 NMSA 1978."
SECTION 6. Section 53-5-2 NMSA 1978 (being Laws 1978, Chapter 9, Section 1, as amended) is amended to read:
"53-5-2. CORPORATE AND SUPPLEMENTAL REPORTS.--
A. Pursuant to rules that the secretary of state adopts to implement this section, a domestic or foreign corporation that is not exempted shall file in the office of the secretary of state within thirty days after the date on which its certificate of incorporation or its certificate of authority, as the case may be, is issued by the secretary of state, and biennially thereafter on or before the fifteenth day of the fourth month following the end of its taxable year, a corporate report in the form prescribed and furnished to the corporation not less than thirty days prior to such reporting date, by the secretary of state, and signed and sworn to by the chair of the board, president, vice president, secretary, principal accounting officer or authorized agent of the corporation, showing among other information prescribed by the secretary of state:
(1) the current status of:
(a) the name of the corporation;
(b) the mailing address and: 1) street address if within a municipality; or 2) rural route number and box number or the geographical location, using well-known landmarks, if outside a municipality, of the corporation's registered office in this state and the name of the agent upon whom process against the corporation may be served;
(c) the names and addresses of all the directors and officers of the corporation and when the term of office of each expires;
(d) the address of the corporation's principal place of business within the state and, if a foreign corporation, the address of its registered office in the state or country under the laws of which it is incorporated and the principal office of the corporation, if different from the registered office; and
(e) the date for the next annual meeting of the shareholders for the election of directors; [and]
(2) the corporation's taxpayer identification number issued by the revenue processing division of the taxation and revenue department; and
(3) the number of female directors of the corporation if the corporation is a domestic corporation pursuant to the Nonprofit Corporation Act or the Business Corporation Act.
B. When the secretary of state receives a report required to be filed by a corporation under the Corporate Reports Act, the secretary of state shall determine if the report conforms to the requirements of this section. If the secretary of state finds that the report conforms, it shall be filed. If the secretary of state finds that the report does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which event the penalties prescribed in the Corporate Reports Act for failure to file the report in the time provided shall not apply if the report is corrected and returned to the secretary of state within thirty days from the date on which it was mailed to the corporation by the secretary of state.
C. The secretary of state may refuse to file a corporate report or a supplemental report received from a corporation that has not paid all fees, including penalties and interest due and payable, to the secretary of state at the time of filing. However, if the corporation and the secretary of state are engaged in any adversary proceeding over the assessment of any fees, the secretary of state shall file the report of the corporation upon its submission to the secretary of state.
D. A supplemental report shall be filed with the secretary of state within thirty days if, after the filing of the corporate report required under the Corporate Reports Act, a change is made in:
(1) the mailing address, street address, rural route number and box number or the geographical location of its registered office in this state and the name of the agent upon whom process against the corporation may be served;
(2) the name or address of any of the directors or officers of the corporation or the date when the term of office of each expires; or
(3) its principal place of business within or without the state."
SECTION 7. Section 53-5-4 NMSA 1978 (being Laws 1959, Chapter 181, Section 4, as amended) is amended to read:
"53-5-4. EXEMPT CORPORATIONS.--The following corporations [shall be] are exempt from filing a report pursuant to the Corporate Reports Act:
A. state banks or insurance companies incorporated under the laws of New Mexico;
B. insurance companies [which] that are incorporated under the laws of the United States, other states or foreign countries and [which] that are licensed to transact business in the state of New Mexico;
C. national banks; and
D. nonprofit corporations, except as required in Paragraph (3) of Subsection A of Section 53-5-2 NMSA 1978."
SECTION 8. TEMPORARY PROVISION--DOMESTIC NONPROFIT CORPORATIONS INCORPORATED BEFORE JULY 1, 2019--NUMBER OF FEMALE DIRECTORS.--If the board of directors of a domestic nonprofit corporation incorporated before July 1, 2019 is not composed of the number of female directors required pursuant to Section 53-8-18 NMSA 1978, the domestic nonprofit corporation shall, by December 31, 2019, increase the number of female directors to meet that requirement in the manner provided in Subsection A of Section 53-8-18 NMSA 1978.
SECTION 9. TEMPORARY PROVISION--DOMESTIC BUSINESS CORPORATIONS INCORPORATED BEFORE JULY 1, 2019--NUMBER OF FEMALE DIRECTORS.--If the board of directors of a domestic business corporation incorporated before July 1, 2019 is not composed of the number of female directors required pursuant to Section 53-11-36 NMSA 1978, the domestic business corporation shall, by December 31, 2019, increase the number of female directors to meet that requirement in the manner provided in Subsection A of Section 53-11-36 NMSA 1978.
SECTION 10. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.
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