(Finance) – The European directive on gender balance on the boards of directors of listed companies she entered in force at the end of 2024, aiming for more balanced gender representation on the boards of listed companies in all EU Member States.
The directive sets a target for large EU listed companies of 40% of the under-represented sex among non-executive directors and 33% among all administrators.
The deadline for transposition by Member States was 28 December 2024 and companies must achieve the objectives by June 30, 2026.
There share of women on boards of directors is on average 34% in the EU. Since 2010, women’s representation on corporate boards has improved in most EU Member States, but the extent of progress varies greatly and in some Member States it is stagnant. For example, in 2024, women represented 39.6% of board members of the largest listed companies in countries with binding gender quotas, compared to 33.8% in countries with soft measures and only 17% in countries that have not adopted any measures.
At this point, Member States must have transposed the provisions of the Directive into their national legislation, including: binding measures specifications for the selection procedure for members of the board of directors, with transparent and gender-neutral criteria; preference rule for the candidate of the underrepresented sex, in the case of equally qualified candidates of both sexes; disclosure of qualification criteria if requested by a non-selected candidate; individual commitments by listed companies to achieve gender balance among executive board members; composition reporting of boards of directors and obstacles to achieving the objective of the Directive, where applicable, and actions taken to overcome them.
I am “effective, proportionate and dissuasive” sanctions are foreseen for companies that do not comply with transparent selection and reporting obligations. Sanctions are defined by Member States and may include fines and/or cancellation of the appointment of contested directors, if necessary.
The directive also requires Member States to publish a list of companies that have achieved the objectives of gender balance and to designate one or more bodies for the promotion, analysis, monitoring and support of gender balance on boards of directors.
The European Commission will verify Member States’ notifications of their transposition measures and whether those measures correctly transpose the provisions of the Directive. The Commission may initiate infringement proceedings against Member States that do not notify transposition or do not correctly transpose the Directive.
“Gender balance is about fairness for all and equal opportunities must be guaranteed in all aspects of life – he said Hadja Lahbib, Commissioner for Equality, Preparedness and Crisis Management – This directive represents a significant milestone: the rules adopted by the EU in 2022 must now be applied by Member States. These standards will unleash the extraordinary potential of women to drive our growth and innovation. I will follow up to ensure that this important legislation is correctly transposed by Member States and diligently implemented. Together, we can break the glass ceiling.”
(Photo: Benjamin Child on Unsplash)