Commission proposes 40% gender objective

The European Commission has published details of proposed legislation designed to break the glass ceiling that continues to bar female talent from top positions in Europe’s biggest companies.

Main elements of the proposal include:

• A minimum objective of 40% by 2020 for members of the under-represented sex for non-executive members of the boards of publicly listed companies in Europe, or 2018 for listed public undertakings.
• The proposal also includes, as a complementary measure, a "flexi quota": an obligation for listed companies 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.
• Qualification and merit will remain the key criteria for a job on the board. The directive establishes a minimum harmonisation of corporate governance requirements, as appointment decisions will have to be based on objective qualifications criteria. Inbuilt safeguards will make sure that there is no unconditional, automatic promotion of the under-represented sex.
• Member States will have to lay down appropriate and dissuasive sanctions for companies in breach of the Directive.
• Subsidiarity and Proportionality of the proposal: The 40% objective applies to publicly listed companies, due to their economic importance and high visibility. The proposal does not apply to small and medium enterprises. The 40% objective is focused on non-executive director posts. In line with better regulation principles, the Directive is a temporary measure and is set to expire in 2028.