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New EU rules on boardroom gender balance
European Commission President, Ursula von der Leyen

08 Jun 2022 EU Print

New EU rules on boardroom gender balance

EU leaders and the European Parliament have reached agreement on new rules aimed at improving the gender balance among non-executive directors of companies listed on stock exchanges across the EU.

The European Commission welcomed the deal on a directive that it had first proposed in 2012.

While the parliament had backed the measure in 2013, EU member states took more than ten years to reach agreement, as some countries did not believe that binding measures at EU level were the best way to deal with the issue.

40% target

The commission said that women were under-represented on company boards, even though 60% of current university graduates were now female.

“Only a third of members of non-executive corporate boards are women, and this is even less among executive boards,” the EU body said.

The directive sets a target for EU companies listed on the EU stock exchanges to speed up progress towards a better gender balance.

It sets a share of 40% of the under-represented sex among non-executive directors, and 33% among all directors.

Penalties

Under the rules, companies that do not meet the targets must prioritise the under-represented sex, where two candidates of different sexes are equally qualified.

Those that fail to meet the targets must also report the reasons for their failure, and the measures they are taking to address them.

Companies must also ensure that board appointments procedures are “clear and transparent”, and that applicants are assessed objectively based on their individual merits, irrespective of gender.

The directive also sets out what type of penalties member states should impose on companies that fail to comply with their obligations. It says that penalties can include fines, and nullity or annulment of a contested director's appointment.

Glass ceiling

European Commission President Ursula von der Leyen (pictured) said that ten years had passed since the commission had proposed the directive.

“It is high time we break the glass ceiling,” she added. “There are plenty of women qualified for top jobs: they should be able to get them.”

After formal approval by MEPs and the EU Council, the directive will enter into force 20 days after publication in the EU’s official journal. Member states will then have to transpose the new elements of the directive into national law within two years.

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