Illinois House Bill Requires Public Corporations with Principal Executive Offices in Illinois to Report to Secretary of State

This blog, originally issued on January 9, 2020, has been updated and revised to reflect the Illinois Secretary of State’s issuance of revised Form BCA 14.05, Annual Report, and new Form BCA 8.12, Female and Minority Directors Report, which clarify and implement Public Act 100-589’s reporting requirements. Simply stated, as reflected on amended Form BCA 14.05, only those domestic and foreign corporations with their principal executive offices located in Illinois will be subject to the reporting requirements of new Section 8.12.

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House Bill 3394, approved by the Governor on August 27, 2019 and effective immediately (Public Act 100-589), amends the Business Corporation Act of 1983 (“BCA”) to add new Section 8.12 and amend Section 14.05.

New BCA Section 8.12 provides that domestic and foreign corporations with principal offices located in Illinois, as soon as possible but not later than January 1, 2021, to report to the Secretary of State, on its Annual Report:

1. whether the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois;
2. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, data on specific qualifications, skills and experience that the corporation considers for its board of directors, nominees for the board of directors and executive officers;
3. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, the self-identified gender of each member of its board of directors;
4. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, whether each member of the corporation’s board of directors self-identifies as a minority person and, if so, which race or ethnicity to which the member belongs;
5. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, 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;
6. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, a description of the corporation’s process for identifying and appointing executive officers, including whether, and if so, how demographic diversity is considered; and
7. where the corporation is a publicly traded domestic or foreign corporation with principal offices located in Illinois, a description of the corporation’s policies and practices for promoting diversity, equity and inclusion among its board of directors and executive officers.

New BCA Section 8.12 also requires the Secretary to State to make the information public and report the information to the University of Illinois which is to review the reported information and publish, on its website, a report that provides aggregate data on the demographic characteristics of the boards of directors and executive officers of corporations filing an annual report for the preceding year along with an individualized rating (established by the University of Illinois assessing the representation of women and minorities on corporate boards)  for each such corporation. The University of Illinois is also required to identify strategies for promoting diversity and inclusion among boards of directors and corporate executive officers.

BCA Section 14.05 as amended adds new Sections 14.05(k) and 14.05(l).  New BCA Section 14.05(k) requires each corporation or foreign corporation to state on its Annual Report whether the corporation or foreign corporation has outstanding shares listed on a major United States stock exchange and then determines if it is subject to the reporting requirements of Section 8.12. New BCA Section 14.05(1) requires corporations subject to new BCA Section 8.12 to provide a statement providing the information required under Section 8.12.

Revised Forms BCA 14.05 and New Form BCA 8.12 have been published. Revised Form BCA 14.05, at Line 1a, asks whether the corporation is a publicly held corporation with outstanding shares listed on a major U.S. stock exchange and which has its principal executive office located in Illinois, as defined by new BCA Section 8.12. If the answer to this question is yes, the corporation is required to complete new Form BCA 8.12 which asks the seven (7) questions listed above.