Spain: Publication of the Bill for an organic law on equal representation and a balanced presence of women and men

On December 15, 2023 the Bill for an organic law on equal representation and a balanced presence of women and menwas published in the Official Parliamentary Gazette. It transposes 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 and further includes the obligation to ensure balanced representation on electoral lists, on constitutional bodies and bodies with constitutional significance, on the council of ministers, in the central government public sector and in professional associations.

In the corporate field, the bill, as we discussed in earlier publications (see here and here),  is more demanding in its scope than the directive’s provisions.

In the words of the bill itself, it will be applicable to:

• listed companies; and
• public interest entities; for these, starting in the fiscal year following the year the following requirements are met: a) average number of workers higher than 250, and b) net revenues above €50 million or total assets above €43 million.

And the main obligations will consist of:

• Ensuring that the board of directors has at least 40% of the underrepresented gender.
• If the objectives are not met, selection processes must be adjusted to ensure their achievement. Exceptional cases are determined for not giving priority to candidates of the underrepresented gender.
• Informing, at their request, candidates who were considered during selection processes on certain elements of the process (criteria, comparative assessment, reasons for choosing an individual who is not of the underrepresented gender).
• Providing the shareholders’ meeting with information on the measures required regarding the balance between women and men on the board of directors, as well as information on the potential penalties for breaching them which could affect the company.
• In the event of court proceedings brought by non-selected candidates of the underrepresented gender, justifying the selection made in the exceptional cases.
• Overseeing that senior management has at least 40% individuals of the underrepresented gender. If that percentage is not met, an explanation must be provided of the reasons and of the measures adopted to achieve that minimum percentage in the immediately following and subsequent years.
• Preparing and publishing every year, as part of the sustainability report, information on the representation of the underrepresented gender on the board of directors (and sending it to the Spanish National Securities Market Commission-CNMV, in the case of listed companies).

A breach of these obligations by listed companies in relation to the board of directors is defined as a serious breach of article 292 of the Securities Market and Investment Services Law.

And, lastly, the bill sets out the following entry into force dates:

• June 30, 2024 for the 35 listed companies with the largest market capitalization, determined using the share price at the close of business on the date the law comes into force.
• June 30, 2025 for listed companies with a market capitalization, on that date, above €500 million.
• June 30, 2026 for listed companies with a market capitalization, on that date, below €500 million.
• For public interest entities, the obligations will be phased in with respect to their boards of directors and senior management, and they must reach 33% by June 30, 2026 and 40% by June 30, 2028.

Now the bill must go through the necessary parliamentary process until it is given final approval which will require, due to being an organic law, the affirmative vote of an absolute majority of the lower house of the Spanish parliament. In that process changes may be made to the wording we have described.