The EU agrees to require that the boards of directors of large European companies be equal

It had been in the drawer of German Chancellor Angela Merkel for a decade. But it was the CDU losing the elections and speeding up a file that involves bringing parity to the boards of directors of listed companies. Thus, after the approval of the governments last March, this Tuesday the negotiators of the European Parliament and the Council of the EU (the governments) have reached an agreement to make the European directive that the Commission presented for the first time a reality Union in 2012. Small and medium-sized enterprises with fewer than 250 employees are excluded from the scope of the directive.

“The proposal includes effective, dissuasive and proportionate sanctions for companies that do not comply with open and transparent designation procedures”, explain the negotiators of the European Parliament: “Parliament managed to include examples of specific sanctioning measures, such as fines and the annulment of the election of the members of the board of directors of companies by a judicial body if they fail to comply with the national provisions adopted in accordance with the directive”.

‼DEAL‼

Provisional agreement with @Europarl_EN on the Directive on improving the gender balance on corporate boards.#EU2022FR #WomenOnBoardspic.twitter.com/lH3qykAUow

— Présidence française du Conseil de l'UE 🇫🇷🇪🇺 (@Europe2022FR) June 7, 2022

The proposal for a directive, in fact, is from 2012, and seeks to “improve the gender balance among members of the boards of directors of listed companies”. The European Parliament voted in favor of the European Commission's proposal by an overwhelming majority in 2013. But it never moved forward because several of them, including Merkel's German government, said it was an issue that needed to be dealt with at the national level.

The so-called Women on Boards of Directors directive aims to introduce transparent hiring procedures in companies, so that at least 40% of non-executive management positions or 33% of all management positions are held by the underrepresented sex.

“Thanks to Parliament, companies must meet this target by June 30, 2026, compared to the Council's proposal of December 31, 2027. In cases where candidates are equally qualified for a position, it must be give priority to the candidate of the least represented sex. The competent Member State to regulate the listed company would be the one in which it has its registered office, and not the one in whose regulated market its shares are traded, ”explains the European Parliament.

The text "sets as an objective a minimum presence of 40% of the underrepresented sex among the directors of listed companies" and "requires companies with a lower participation of the underrepresented sex among non-executive directors to introduce clear criteria and unequivocal in the selection procedures for these positions to achieve said objective”.

“Spain, how could it be otherwise, supports this directive because we believe it is essential to reduce gender gaps. But we would have liked it to be more ambitious, in the mandatory nature of the measures, in the deadlines for the objectives, and the equality of women and men cannot be a choice. In Spain, we have gone from 19% to 31%, thanks to the policies of our country, such as the Equality Law of 2007 and the advancement of public policies of this legislature”, said the Spanish Secretary of State for Equality, Ángela Rodríguez, in the debate of the 27: "Equality is a compass to walk as a European Union".

According to the European Institute for Gender Equality (EIGE), women made up 28% of board members of the largest listed companies in EU countries in 2019. France, according to EIGE, “ it remains the only Member State with at least 40% of each gender on boards of directors.”

Once the Parliament and the Council have formally approved the agreement, the directive will enter into force 20 days after its publication in the Official Journal of the EU. Member states would have to implement the directive two years after its adoption. "Parliament managed to include an assessment on the scope of the directive at a later stage on whether non-listed companies should be included in the scope of the directive," the negotiators explain.



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