This month, the European Parliament and Council reached a political agreement on a proposed directive aimed at improving the gender balance on the boards of large EU listed companies.

The directive, which was originally proposed by the European Commission in 2012, sets a target for EU companies listed on EU stock exchanges to accelerate towards better gender balance on their boards: 

  • At least 40% of the underrepresented sex must be represented in non-executive boards or 33% among all directors. Companies that do not achieve those targets must prioritise the underrepresented gender when considering a new appointment where two candidates are equally qualified.
  • Clear and transparent board appointment procedures must apply, so that applicants are assessed objectively based on their individual merits, irrespective of gender.
  • Companies that fail to meet the objectives must report the reasons and the measures they are taking to address the shortcoming.

The political agreement reached by the European Parliament and the Council is now subject to formal approval. Once published in the Official Journal of the EU, the directive will enter into force 20 days after publication and Member States will then need to transpose the directive into national law within two years.