The EU will require that women occupy at least 40% of the seats on the boards of listed companies

The President of the European Commission, Ursula von der Leyen, in the European Parliament.JULIEN WARNAND (EFE)

An important step by the European Union to increase the representation of women in company command posts.

They will have to account for 40% on the boards of directors of listed companies.

This percentage drops to 33% if the entire management team of the company is taken into account.

Both demands are included in the directive that the representatives of the Council of the EU and the European Parliament have agreed this Tuesday afternoon, as reported by the Commission, congratulating itself that its initiative has finally gone ahead.

The text, which once definitively ratified will have to be transposed into national legislation, contemplates "effective, proportionate and dissuasive" sanctions when obligations are breached in selection processes, points out the European Executive.

The goal is to reach the stated quotas by mid-2026.

The directive sets, in reality, a minimum representation of 40% for the underrepresented gender, obviously women given the real situation.

And he left the European Executive in 2012, when the Portuguese José Manuel Durao Barroso was still president of the Commission.

Ten years have passed before the two legislative bodies of the EU, the Council of the EU, or what is the same, the Member States, and the Parliament finally came up with a political agreement that must now be ratified by both parties.

The pact has been possible, to a large extent, due to the change of government in Germany, since it was, precisely, the former German chancellor, Angela Merkel, who did not see the option of setting the legal obligation for companies to have representation quotas for gender, according to community sources.

The announcement has been received with euphoria by the president of the European Commission, Ursula von der Leyen, who in a message posted on Twitter has thanked "everyone who has worked on this key file for a decade."

Von der Leyen held three different portfolios in Angela Merkel's governments until reaching her current position.

Finally we have an agreement on the @EU_Commission's #WomenOnBoards proposal!

Thank you to all those who worked on this key file for a decade.

This is a great day for women in Europe.

It's also a great day for companies.

Because more diversity means more growth, more innovation

– Ursula von der Leyen (@vonderleyen) June 7, 2022

According to data released by the European Executive, currently eight countries of the Union already have set minimum quotas by gender on the boards of directors of companies.

Another 10 countries would have opted for legal recommendations, while the remaining eight do not contemplate any obligation in this field.

For companies that do not meet gender quotas, the board must explain its criteria clearly and transparently and underline the neutrality of its processes for choosing those who occupy management positions.

In addition, they must prioritize the underrepresented gender when there are candidates of a different sex on equal terms.

The battery of measures to achieve equality continues with the obligation for companies to publish the qualification criteria when requested by the unselected candidate, with the companies being responsible for demonstrating that no measure has been transgressed.

"Companies that do not meet the objective of this directive must report the reasons and the measures they are adopting to remedy this deficiency", points out the Commission itself, which then makes it clear that if it is not complied with, the States Members must impose dissuasive penalties, and this includes fines and the annulment of the contested appointment.

“The gender imbalance is more than double in countries that have not taken substantial measures than in those that have.

Countries with quotas have the highest proportion of women on the boards of listed companies.

However, to date, only one Member State has achieved an effective gender balance on company boards”, argues the Commission to support its position.

The President of the European Commission, Ursula von der Leyen, has celebrated this agreement on her Twitter social network account and has shown her gratitude to all those who have made it possible.

“It is a great day for women in Europe.

It is also a great day for companies.

Because more diversity means more growth, more innovation”, underlined the head of the Community Executive.

In addition, the norm agreed this Tuesday contemplates the creation of lists of compliant companies in order to draw the colors of companies that do not and encourage the correction of gender inequality in government bodies.

Once the text is published in the Official Gazette of the EU, the member states have two years to transpose the rule into their legislation.