The EU reaches provisional political deal on balanced gender representation on the boards of listed companies
Listed companies should aim to have at least 40% of non-executive director positions filled by members of the under-represented sex, or 33% of all director positions, including executive directors. The deal also sets out guidelines for selection processes.
The European Parliament and the Council have reached a deal in the framework of the Directive on gender balance on company boards that aims to ensure a true gender balance on the boards of listed companies throughout the European Union. The deal was welcomed by the European Commission.
The directive focuses on the following key aspects:
- To aim to have at 40% of non-executive director positions at listed companies filled by members of the under-represented sex, or 33% of all directors, including executive directors. If companies do not meet this target, they should apply transparent, gender-neutral criteria when appointing directors and prioritize the under-represented sex when there are equally qualified candidates of both sexes.
- Clear and transparent appointment procedures, with objective merit-based assessment, irrespective of gender. The selection procedure for non-executive directors should comply with the following binding measures:
- Where candidates of both sexes are equally qualified, priority shall be given to the candidate of the under-represented sex at companies that do not meet the gender balance target.
- Companies must disclose the qualification criteria when so requested by an unsuccessful candidate.
- Companies must make individual commitments to achieve a gender balance among their executive directors.
- Companies that fail to meet the gender balance objective shall indicate the reasons for not doing so and describe the measures adopted to remedy such failure.
- The sanctions imposed by Member States on companies that breach selection and reporting obligations must be effective, proportionate and dissuasive.