EU company leadership gender equality directive enters into force News
EmDee, CC BY-SA 4.0, via Wikimedia Commons
EU company leadership gender equality directive enters into force

The European Commission published a press release on Friday outlining its new Gender Balance on Corporate Boards Directive, which entered into application at the end of December 2024.

The new directive aims to produce effective national measures that promote gender equality among companies’ administrative and oversight boards. Micro, small and medium sized enterprises will not be included in the obligation.

Article 5 of the directive provides Member States with two options: either taking measures aiming at people of the underrepresented sex making at least 40% of non-executive director positions, or members of the underrepresented sex hold at least 33 % of all director positions, including both executive and non-executive directors (with executive directors defined as  positions which occupy with day-to-day company management, and non-executive directors typically positions of an oversight nature).

Directives must be implemented at the national level by EU member states. The deadline for implementation of the directive was December 28, 2024, and 12 member states have yet to notify the Commission of national transposition. The Commission may take enforcement action against these states which could result in fines.

This new directive can be attributed to the Commission’s “Gender Equality Strategy 2020-2025,” which includes decision-making in one of its five key objectives. The directive is regarded as an important milestone for the Gender Equality Strategy 2020-2025, after the conclusion of a negotiation process which lasted about ten years. In a Communication from the Commission of 5 March 2010, the representation of women in decision-making and positions of power, including the private sector, is stated as a field of action for equality between women and men.

The nomination and/or selection process of executive and non-executive board members in European-listed companies is an important right for their shareholders, stemming from a stable practice in the corporate governance practices in the European Union. The level of implementation by national governments remains to be seen.

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