New rules on the under­represen­ted gender in the manage­ment of com­panies and commer­cial foun­dations

The amendments will come into force on 1 January 2023, effective from the financial year starting on 1 January 2023 or later. The amendments do not introduce quotas as the scheme does not fix an ultimate time limit to achieve the target figures.

New rules of the Companies Act and the Commercial Foundations Act

The new rules specify and expand the existing duty under the Companies Act and the Commercial Foundations Act to fix target figures for the under-represented gender. Companies covered by the present rules should therefore be aware of the adopted amendments.

The amendments imply that:

• Companies with both a board of directors and an executive board must fix target figures for both the board of directors, the aggregate executive board and persons on subordinate management levels who refer directly to the executive board, for example persons with personnel responsibility. Prior to the adoption, it was only a requirement to fix target figures for the under-represented gender in the senior management.
• The rules covering commercial foundations will be expanded so that target figures are also to be fixed concerning the number of the under-represented gender on other management levels in addition to the board of directors.
• Groups preparing consolidated financial statements will lose the possibility of parents and parent foundations adopting aggregate target figures and aggregate policies covering the entire group. In the future, each company or foundation in a group will therefore have to fix individual target figures and prepare individual policies and follow up on the policies for each group entity.
• The amendment also implies that the compulsory statement concerning achievement of the fixed target figures and the company’s policy to increase the number of the under-represented gender in the future must appear from the management’s review. It is therefore no longer sufficient to refer to the company’s website or the parent’s consolidated financial statements.

Further measures

Together with a number of other EU member states, Denmark, the Netherlands and Germany have declared their support to regulate the gender composition of managements within the EU. This will take place by way of resumption of a parked proposed directive from 2012 concerning the gender balance among board members in listed companies.

The proposed directive contains an objective that the under-represented gender must amount to minimum 40 % of the boards of the companies in question within a time frame of eight years. The proposed directive also contains a duty concerning positive discrimination according to which companies must select a candidate from the underrepresented gender among several equally qualified candidates.

The member states must demand annual reports from the companies and impose sanctions when required. It is therefore still not clear whether the directive will contain a specific quota regulation or just something similar.

On 14 March 2022, the ministers of the 27 EU member states adopted a proposal for a revised directive which will form the basis of the negotiations between the Council and the Parliament until the adoption of a final directive on the gender composition of managements.