Compliance Takeaways

• California's new Truth in Disclosure Act requires some major corporations to investigate decades—and potentially generations—of corporate history for financial connections to slavery and eventually disclose what they find under penalty of perjury.
• Compliance may require companies to trace predecessor corporations, subsidiaries and historical records involving banking, insurance, loans, collateral, shipping and other slavery-related transactions.
• The exact statutory requirements are contained in AB 2599 and new Civil Code §1714.44, while the California Civil Rights Department is responsible for developing the public digital system that will eventually house the disclosures.

By Samuel López | USA Herald

SACRAMENTO - California corporations are confronting an unusual new compliance problem: How do you conduct a legally defensible investigation into business transactions that may have occurred more than 150 years ago?

Gov. Gavin Newsom signed Assembly Bill 2599, known as the Truth in Disclosure Act, on September 30. The legislation, now Chapter 954 of the Statutes of 2026, adds Civil Code §1714.44 and requires qualifying companies doing business in California to investigate and disclose historical commercial connections to slavery.

The law generally covers businesses with more than $100 million in annual worldwide gross receipts that existed—or had a predecessor company existing—on or before December 31, 1964.

For corporate compliance departments, however, determining whether the law applies may be the easy part.

Covered companies must search records within their possession, control and knowledge, as well as records of related entities, for evidence that they or their predecessors bought or sold enslaved people, used enslaved people as collateral, financed their purchase, insured enslaved people or related transactions, or provided services facilitating those transactions.

That potentially transforms AB 2599 compliance into something resembling a massive historical document-review project.

Companies should begin mapping their corporate genealogy, identifying predecessor and acquired companies, determining where surviving historical records are maintained and establishing a documented methodology for searching them. Legal and compliance teams may need assistance from archivists, historians, records-management professionals and outside counsel when corporate ancestry extends into the nineteenth century.

The statute specifically calls for applicable records dating from 1849 forward, including slaveholding insurance policies; evidence of purchases, sales or leases of enslaved people; transactions using enslaved people as collateral; loans used to purchase enslaved people; insurance covering those transactions; and other corporate records evidencing participation in slaveholding or the slave trade.

Companies must also produce an index summarizing the records, including the years involved, industries and companies identified, predecessor or subsidiary names and the types of documentation submitted.

Perhaps most consequentially for corporate officers, the filing isn't merely informational.

The company must provide a statement verifying that it exercised due diligence in searching its records and those of related entities, while the disclosure itself takes the form of an affidavit under penalty of perjury.

That creates an important compliance question that California has yet to fully answer: What exactly constitutes sufficient “due diligence” when investigating records potentially dating to the 1800s?

The law establishes what companies must disclose, but it does not provide corporations with a detailed archival-investigation protocol governing every search they should conduct.

For now, corporations looking for the exact compliance language should begin with the official California Legislature AB 2599 page and the chaptered language of Civil Code §1714.44.

Companies should also monitor the California Civil Rights Department, which is responsible for creating the public digital platform containing the affidavits and supporting records.

CRD already operates sophisticated compliance systems for other California reporting mandates. Its pay-data program, for example, provides employers with a handbook, user guide, Excel templates, CSV examples and detailed FAQs.

As of now, however, CRD's public legal-records materials do not appear to provide an equivalent AB 2599-specific compliance package. Its existing legal-records page directs businesses and the public to statutes and regulations for controlling legal language.

The first affidavits for covered companies already doing business in California as of January 1, 2028 are due January 15, 2029—or January 15 of the year following development of the required digital platform, whichever occurs later. The statute also requires a company discovering new reportable information afterward to submit an updated affidavit.

That gives corporations time, but potentially not as much as it appears.

Reconstructing the history of a modern corporation through mergers, acquisitions, subsidiaries and predecessor companies can mean following a paper trail across generations.

California has therefore created something unusual in corporate compliance: a modern legal obligation that may require today's companies to investigate business decisions made before anyone currently running them was born.