Main elements of the draft law:
- If a publicly listed company in Europe does not have 40% of women among its non-executive board members, the new law will require it to introduce a new selection procedure for board members which gives priority to qualified female candidates.
- The law places the emphasis firmly on qualification. Nobody will get a job on the board just because they are a woman. But no woman will be denied a job because of their gender either.
- The law only applies to the supervisory boards or non-executive directors of publicly listed companies, due to their economic importance and high visibility. Small and medium enterprises are excluded.
- Individual EU Member States will have to lay down appropriate and dissuasive sanctions for companies in breach of the Directive.
- The law is a temporary measure. It will automatically expire in 2028.
- The law also includes, as a complementary measure, a “flexi quota”: an obligation for companies listed on a stock exchange to set themselves individual, self-regulatory targets regarding the representation of both sexes among executive directors to be met by 2020 (or 2018 in case of public undertakings). Companies will have to report annually on the progress made.
The European Parliament has today voted with an overwhelming majority (459 for, 148 against and 81 abstentions) to back the European Commission’s proposed law to improve the gender balance in Europe’s company boardrooms. The strong endorsement by the Members of the European Parliament means the Commission’s proposal has now been approved by one of the European Union’s two co-legislators. Member States in the Council now need to reach agreement on the draft law, amongst themselves and with the European Parliament, in order for it to enter the EU statute book. The most recent figures confirm that, following the Commission’s determined action in this area, the share of women on boards across the EU has been on the rise for the past three years and has now reached 16.6%, up from 15.8% in October 2012.
“Today’s European Parliament vote is a historic moment for gender equality in Europe,” said Vice-President Viviane Reding, the EU’s Justice Commissioner. “The directly-elected European Parliament has made its voice heard loud and clear: Europe needs strong rules to tackle the gender imbalance in company boardrooms. I would like to thank rapporteurs Rodi Kratsa-Tsagaropoulou and Evelyn Regner for their hard work and committed support of the Commission’s proposal. The Parliament has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs. The Council of Ministers, the EU’s second Chamber, should now rise to the challenge and make swift progress on this draft law, which places qualification and merit centre stage.”