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The European Union's Women on Boards Directive

The Directive on improving the gender balance among directors of listed companies, more commonly called the ‘Women on Boards Directive’ is a crucial part of the 2020-2025 European Union Gender Equality Strategy. 

 

“Achieving gender equality in the workplace requires a comprehensive approach, which also includes fostering gender-balanced decision-making within companies at all levels, as well as closing the gender pay gap. It is a key prerequisite for reducing poverty among women.”


The text was approved by the European Parliament in 2012, but then blocked by the European Council. Some countries opposed regulation, preferring voluntary measures. Other countries thought that if actions had to be taken, it should be at national level.

At the end of 2021 the President of the European Commission, Ursula von der Leyen, soon after helped by the French Presidency, started a new round of talks amongst the political parties and States. European Women on Boards actively participated in the negotiations. In November 2022 the text was voted and approved by a very large majority of countries. It entered into force in December 2022.

The Directive aims for gender balance among directors of listed companies. By mid-2026 every stock-listed company within the European Union needs to have at least 40% female non-executive directors or have a female representation of executive and non-executive of at least 33%.

On average, large European companies currently have 38% female non-executive directors, with major differences though between countries as the graph below evidence.

Every stock-listed company with a registered office in one of the 27 EU countries. 

 

A registered office is the official address of the company. A company has only one official registered office, often called headquarter.

No. The Women on Boards provides that when two candidates are equally qualified that the underrepresented sex must be chosen and that the company must motivate its decision upon request of the unsuccessful candidate.

Companies that do not meet the target, must set quantitative objectives, adjust the process for selecting candidates, ensuring non-discrimination and an objective selection process.

 

In addition, non-compliant companies will not be entitled for public contracts and concessions.

Yes. Each country will have to foresee penalties that are effective, proportionate, and dissuasive, such as fines or annulment of nominations. Member States must also publish information on companies that are reaching targets, as peer-pressure to complement enforcement.

 

In addition, non-compliant companies will not be entitled for public contracts and concessions.

Member States has until December 2024 to transpose the Directive into national law and its measures must be effective by June 2026.

Stock-listed companies within the EU have until 30 June 2026 to reach one of the two targets set by the Women on Boards Directive.

 

What if a national law has already been adopted locally? 

In some circumstances Member States will be exempt from implementing the Directive’s provisions.

 

This will be the case if by the date that the Directive comes into force either:

 

(i) members of the underrepresented sex hold at least 30% of the total number of all nonexecutive director positions or at least 25% of the total number of all director positions in listed companies; or

 

(ii) the Member State’s national legislation: 

(a) requires that members of the underrepresented sex hold at least 30% of nonexecutive director positions or at least 25% of all director positions in listed companies; 

(b) includes effective, proportionate, and dissuasive enforcement measures in relation to non-compliance; and (c) all listed companies not covered by such national legislation set individual quantitative objectives for all director positions.