At a glance
- The Gender Balance on Corporate Boards Directive (Directive) applies from the end of 2024.
- The Directive sets a target for large EU listed companies of 40% of the underrepresented sex among their non-executive directors, and 33% among all directors.
- The Directive’s rules also include transparent, gender-neutral selection procedures for board directors and the disclosure of qualification criteria if requested by an unsuccessful candidate. It mandates companies to commit to gender balance among executive directors, report on board composition and obstacles, and also imposes penalties for non-compliance. Member States must publish details of compliant companies and designate bodies to support gender balance.
- The deadline for the transposition by Member States was 28 December 2024. Companies must meet the targets by 30 June 2026.
Background
On 17 October 2022, the European Council gave their final approval to the Directive which aims to promote a balanced gender representation on the boards of listed companies. The deadline to transpose the provisions of the Directive fell two years later, on 28 December 2024.
Representation targets and transparent appointments to improve gender balance
The Directive lays down that at least 40% of non-executive director positions in listed companies must be held by members of the underrepresented sex by 2026. Where companies decide to apply the rules to both non-executive and executive directors, the target will be 33% of all director positions by 2026.
If companies fail to achieve the objectives, they will be required to adjust their selection process to include a fair and transparent selection and appointment procedure, comparing candidates on neutral criteria. Where candidates are equally qualified, priority should be given to those from the underrepresented sex. Once a year companies will be required to provide information about the gender representation on their boards and the measures being taken to achieve the 33% or 40% objective. A list of the companies that have achieved the directive’s objectives will be published annually.
If a country already has in place legislation which is equally as effective or has come close to achieving the objectives, they may suspend the Directive’s requirements.
Next steps
The deadline for the transposition by Member States was 28 December 2024. Companies must meet the targets by 30 June 2026. The Commission will check the notifications of Member States of their transposition measures, and whether these measures correctly transpose the provisions of the Directive. The Commission can launch infringement proceedings against Member States that fail to notify transposition, or to correctly transpose, the Directive.
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