The EU reaches provisional political deal on balanced gender representation on the boards of listed companies

Spain - 06 / 16 / 2022

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.