This post was contributed by Poppy Pritchard, Associate, Norton Rose Fulbright LLP (London)

Gender imbalance on corporate boards poses a serious challenge for all EU member states. In an effort to tackle this issue the European Commission launched a public consultation on possible action at EU level on 5 March 2012. As a result of feedback from the public consultation, in November 2012 the European Commission published draft legislation addressing gender equality in the boardrooms of listed companies. The aim of the draft legislation is to introduce a statutory quota whereby 40 per cent of non-executive directors in listed companies should be women by 2020. If enacted, certain companies will need to comply with the quota or run the risk of incurring penalties. The current proposal will only apply to European listed companies and to non-executive directors. However, listed companies may create voluntary quotas for executive directors under the proposal.

The draft legislation is currently working its way through the EU legislative process. On 14 October 2013, it was announced that the European Parliament’s Committee on Legal Affairs and the Committee on Women’s Rights & Gender Equality voted to support the proposal (40 for, 9 against and 2 abstentions). This is a significant step which paves the way for further progress of the draft legislation.

This comes at the same time as a report published by the Commission on women and men in leadership positions. Interestingly, the report notes that there was, during the period from October 2012 to April 2013, an increase in the proportion of women on company boards in 20 EU member states, the largest of which occurred in Slovakia, Hungary and Bulgaria. In contrast there appears to have been a decline in the proportion of women on boards in Romania, Lithuania, Poland, Malta, Greece, Portugal and the UK. In support of the draft legislation this report also notes that the most significant improvements to the gender imbalance at board level since 2010 have occurred in member states that have already passed binding national legislation in this regard.

The draft legislation has had a mixed reception across the EU member states. The UK Government, for example, is opposed to it. In January 2013, the House of Lords submitted a response to the President of the Council of the EU stating that the draft legislation is disproportionate and unnecessary. Other member states have also voiced concerns.

There is likely to be a great deal of controversy before the legislation is passed – if indeed it is passed at all.

 

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