#Alert: Directive to boost gender balance on corporate boards

This week, the European Parliament and the Council of the EU have reached agreement on the Directive aimed to reduce the gender imbalance in corporate boards. It has finally come to fruition 10 years after it was proposed by the European Commission. The legislation is expected to come into force in 2026.

Here are the key points of the proposed Directive:

1. Only listed companies (public companies) in the European Union will have to implement the solutions set out in the Directive.
2. The Directive establishes sets out 40% quota for the underrepresented gender among non-executive directors (non-executive boards, which in Polish companies would be supervisory boards) or 33% quota for all board director roles. Each Member State can decide on one of these option.
3. Companies must ensure that the procedures for appointing board members are clear and transparent and that candidates are assessed objectively based on their individual achievements and regardless of gender.
4. Those companies that fail to reach the quota will have to prioritise the underrepresented gender in the recruitment process if two candidates of different genders have the same qualifications.
5. Companies will have to disclose their selection criteria if requested by a rejected candidate.
6. Moreover, companies will be required to prove that the principles of gender balance have not been breached if alleged that the rejected candidate of the underrepresented gender had the same qualifications.
7. Sanctions imposed by Member States on companies that fail to comply with these obligations must be effective, proportionate and dissuasive. They may include fines and the annulment of the appointment or removal of the challenged director.

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