Can an administrative body/board impose rules that are more restrictive than the state law the rule is based?

a fairly new state law allows private persons or entities to contract with the state to provide a public service. A recent amendment requires the contractor to incorporate. The administrative board and legal department is not friendly to this provision so they have imposed a rule restricting the governance composition of these service providers. In other words, my board and I are liable and responsible for the operations and viability of our corporation, but the state board is now telling me who I can and cannot have on my corporate board. Again, the law does not require or allude to such things. I have not heard of a state agency ever reaching into private corporate governance and wonder if I should pursue action. We are told the state will not allow our corporations to continue contracting with the state unless we place or remove certain people from our boards. The restriction does not have to do with things like having clean criminal background checks- I could understand tha

It's not related to conflicts of interest either, as that is stated in the law. They actually want the customers that we serve to be on our boards having an influence on how we carry out our service. Further, they want us to have elections from among the customers we serve to put some of these people on our private corporate board. I have never heard of a government agency having that much regulation over the governance of a private contractor. I can understand that the operations and outputs may need to meet standards, but who sits on our board seems over the top.

I need a lawyer to understand what you said didn't see in there anywhere where it said what you said they said. With that said the Administrative body/board (responsible authority) can mandate stricter rules. State laws are only a minimum law and can be added to but not taken away from. County laws can be stronger than state laws Yet not enforced out side the county. Federal law can be superseded by state law but not lessened only more sever. If you said all of this right all they said was you could no longer contract as a private person but you still can as a corporation.

I am no lawyer, but here is my two cents worth on this.

I believe you should challenge this in court, as I do not believe that a state or even federal agency can dictate who you can have on your board unless they either spell out specific objections to an individual. These type of objections are almost always related to either criminal activity, or convictions, or to a conflict of interest. An example of what I mean by a conflict of interest is a Car dealer being on the board of a company that is wanting to administer a DMV office. Or a pharmacist being on the board of a company that is to do inspections or oversite of pharmacies.