The European Parliament approves the Women on Boards directive on the presence of women on boards of directors, but only for companies with at least 250 employees.
After a full ten years since it was first drafted, the Women on Boards directive can finally enter into force. The European Parliament, at its sitting last Tuesday, 22 November, adopted the proposal definitively; it is intended to increase the number of women on the boards of directors of stock-exchange-listed companies in the European Union — the "women on boards" in question.
The actual objective of the Women on Boards directive is to introduce transparent recruitment procedures in companies so that, by the end of June 2026, 40 per cent of non-executive director positions and 33 per cent of all director positions are held by the under-represented sex — which, in 2022, is still women in almost every case.
Merit will remain the primary criterion during selection procedures, which, under the new rules, will have to be transparent. Listed companies will be required to provide annual information on gender representation on their boards of directors to the competent authorities and, if the targets have not been met, will have to explain how they intend to achieve them in the short term, publishing the relevant road map on company websites so that it is easily accessible.
The real limitation of the Women on Boards directive lies in its scope: small and medium-sized enterprises — which the directive defines as companies with fewer than 250 employees — are excluded from its scope of application.
The directive commits the 27 EU member states to putting in place effective, dissuasive and proportionate sanctions for companies that do not follow open and transparent appointment procedures. Judicial bodies will have to have the power to dissolve the boards of directors selected by companies should they violate the principles of the directive, which will enter into force 20 days after its publication in the Official Journal of the European Union: from that point, member states will have two years to transpose it.
The two rapporteurs for the measure, Austrian MEP Evelyn Regner and Dutch MEP Lara Wolters, explained in the chamber that "we are finally giving women a fair chance to hold top positions in companies and we are improving corporate governance. Women are innovative, intelligent, strong and capable of doing many things. We are removing one of the main obstacles preventing women from obtaining leadership positions: informal male networks."
In the ten years during which this directive sat on the shelf, they added, "boards of directors have remained predominantly a male preserve. But in the countries where binding quotas have been introduced (9 out of 27 countries, ed.), far more women have been appointed. With this law, those countries will no longer be the exception and gender balance on the boards of listed companies will become the norm across the EU."
In 2021, in fact, according to a study by the Jacques Delors Institute, only 30.6 per cent of board members of the largest listed companies in the EU are women, with notable differences between EU countries (ranging from 45.3 per cent in France to 8.5 per cent in Cyprus). Despite representation on boards having increased, in 2022 fewer than one in ten large listed companies in the EU has a woman as chair or chief executive.
