AP adopts rules to allow increased representation of women in leadership positions

On Tuesday, Parliament passed a directive on women’s representation on company boards. This law was first proposed ten years ago. The directive stipulates that the procedure for the appointment of company board members must be transparent.

Selection procedures for board members will continue to be based on candidates’ merit, but these procedures will need to be transparent. Listed companies will have to inform the authorities about gender representation on their boards of directors once a year. If the objectives of the directive are not achieved, the company will have to indicate how it plans to do so. This information will also be published in an easily accessible form on the company’s website.

Member States will have to introduce effective, dissuasive and proportionate penalties, such as fines, for companies that fail to provide clear and transparent board appointment procedures. If the company violates the principles of the directive, the court may dissolve the board of directors of the company.

“The adoption of this directive ten years after its inception is an important step towards gender equality. We will finally give women a real chance at corporate leadership and improve corporate governance. Women are innovative, smart, strong and can do a lot.

In the future, professional competence and transparency in selection processes will be more important than ever before, said Rapporteur Evelina Regner (S&D, Austria).

On the other hand, reporter Lara Walters from the Netherlands said, “For ten years, this directive was on the table, meeting rooms mostly belonged to men. However, in Member States where binding quotas have been introduced, significantly more women have been appointed. Thanks to this law, these Member States will no longer be the exception and gender balance on the boards of listed companies will become the EU-wide norm.”

Now that the Parliament and the Council of Europe have officially approved the agreed text of the directive, the directive will enter into force 20 days after its publication in the EU Official Journal. Member states will have two years to implement the rules.

The proposal for the directive was first presented by the European Commission in 2012, and the European Parliament adopted its negotiating position in 2013. For almost a decade, this document was blocked in the Council, until March 2022, the labor and social affairs ministers of the EU countries managed to agree on a position. Parliament and Council negotiators reached an agreement in June.

In 2021, only 30.6% of board members in the EU’s largest listed companies are women, although this figure varies considerably between Member States; the highest figure is in France (45.3%) and the lowest figure is in Cyprus (8.5%).

Despite the increasing representation of women on company boards, less than one of the ten largest listed companies in the European Union in 2022 still has a woman as chairman or CEO.