Publication of the EU directive on improving gender balance on company boards

Unión Europea - 

The new EU rules, which will have to be transposed into national law, promote more balanced representation on the boards of listed companies in all Member States.

Directive (EU) 2022/2381 of the European Parliament and of the Council, of 23 November 2022, on improving the gender balance among directors of listed companies and related measures has been published in the Official Journal of the European Union. The directive provides that Member States must set an objective to ensure that at least 40% of non-executive director positions at listed companies are held by members of the underrepresented sex. If Member States choose to apply the new rules to both executive and non-executive directors, the target would be 33% of all director positions. Listed companies that are not subject to this latter objective must set individual quantitative objectives with a view to improving the gender balance among executive directors.

These objectives must be met by June 30, 2026.

The directive establishes a series of measures to help achieve these objectives, including adjustments to selection processes at companies that do not meet the objectives and giving priority to the candidate of the underrepresented sex when choosing between equally qualified candidates.

It also stipulates that information on the measures adopted will have to be provided to the competent authorities and published on company websites, including reasons why the objectives were not achieved and the measures the company has taken or intends to take in order to achieve them.

Member States must also establish rules for effective, proportionate and dissuasive penalties.

The directive will enter into force 20 days after its publication and must be transposed no later than December 28, 2024. It will expire on December 31, 2038.

We previously covered this topic in our alerts of October 18 and June 16, 2022.