The Act of 28 July 2011 requires the presence of women on the boards of listed companies and, to that end, added a new article 518bis to the Companies Code which enters into force in the near future.
The rule
At least one-third of the members of the board of directors of listed companies1 must be of a different gender than the other members (rounded off to the nearest whole number).
Examples:
- A board of seven directors: two (2.33… -> 2) directors must be of the other gender.
- A board of eight directors: three (2.66… -> 3) of them must be of the other gender.
- A board of ten directors: three (3.33… -> 3) of them must be of the other gender.
As from what date do the gender quota apply?
As a general rule, the gender quota requirement applies as from the first day of the company's financial year starting after 14 September 2016.
Examples:
- If the financial year starts on 1 January, the gender quota apply as from 1 January 2017.
- If the financial year starts on 1 July, the gender quota apply as from 1 July 2017.
- If the financial year starts on 1 October, the gender quota apply as from 1 October 2016.
Small listed companies2 or companies having a free-float of less than 50% have been granted two additional years to comply with the gender quota (i.e. as from 1 January 2019, 1 July 2019 or 1 October 2018 respectively for the examples given above).
For companies recently listed, the requirement applies as from the first day of the company's sixth financial year after the listing date.
What sanctions apply and as from when?
- Any (re)appointment of a director resulting in a breach of the gender quota will be null and void. This sanction applies as from the same date as the entering into force of the gender quota.
- If the shareholders' meeting does not form a board in accordance with the gender quota, all the benefits in connection with a director's mandate (in the broadest sense – fixed remuneration, attendance fees, vesting of warrants, etc.) will be suspended for as long as the board's composition is in breach of the gender quota. However, subsequent reinstatement of the benefits will not result in a "catch up" of benefits from the suspension period. This sanction applies exactly one year after the entering into force of the gender quota (i.e. 1 January 2018, 1 July 2018 and 1 October 2017 for the examples given above).
1i.e. Companies of which securities are admitted to trading on a regulated market within the meaning of Article 2, 3° of the Act of 2 August 2002 on the supervision of the financial sector and financial services. Any subsidiaries do not fall within the scope of the rule.
2Companies which, on a consolidated basis, meet at least two of the following three criteria:
- average workforce of less than 250 employees during the fiscal year concerned;
- total assets of less than or equal to EUR 43,000,000;
- net annual turnover of less than or equal to EUR 50,000,000.