Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures
Date: 2012-11-14
Institutions: European Commission
Subjects: appointment of staff, board of directors, gender equality, private sector, stock exchange

EUROPEAN 
COMMISSION 

Brussels, 14.11.2012  
COM(2012) 614 final 

2012/0299 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on improving the gender balance among non-executive directors of companies listed on 
stock exchanges and related measures 

(Text with EEA relevance) 

{SWD(2012) 348 final} 
{SWD(2012) 349 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Background 

Company  boards  in  the  EU  are  characterised  by  persistent  gender  imbalances,  as  evidenced 
by the fact that only 13.7% of corporate seats in the largest listed companies are currently held 
by  women  (15%  among  non-executive  directors).1  Compared  to  other  areas  of  society, 
especially to the public sector2, the under-representation of women on the boards of publicly 
listed companies is particularly significant. 

Member  States  and  the  EU  institutions  have  undertaken  numerous  efforts  in  the  course  of 
several decades to promote gender equality in economic decision-making, notably to enhance 
female  presence  in  company  boards,  by  adopting  recommendations  and  encouraging  self-
regulation. Two Council Recommendations (in 1984 and 1996) encouraged the private sector 
to increase the presence of women at all levels of decision-making, notably by positive action 
programmes,  and  called  upon  the  Commission  to  take  steps  to  achieve  balanced  gender 
participation  in  this  regard.3  National  self-regulation  and  corporate  governance  initiatives 
were aimed at encouraging companies to appoint more women into top-level positions. 

However,  progress  in  increasing  the  presence  of  women  on  company  boards  has  been  very 
slow, with an average annual increase in the past years of just 0.6 percentage points.4 The rate 
of  improvement  in  individual  Member  States  has  been  unequal  and  has  produced  highly 
divergent results. The most significant progress was noted in those Member States and other 
countries  where  binding  measures  had  been  introduced.5  Self-regulatory  initiatives  in  a 
number of Member States have not yielded any similarly noticeable changes. At the current 
pace it would take several decades to approach gender balance throughout the EU.  

Growing discrepancies between Member States are likely to increase given the very different 
approaches  pursued  by  individual  Member  States.  Some  Member  States  have  developed 
national  legislation  but  addressed  different  groups  of  companies  and  with  differing  legal 
approaches. National legislations, if they address the problem at all, are evolving in different 

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This gender imbalance is striking in all EU Member States, with national averages ranging from around 
5% in MT, CY, HU, LU, LU, PT, IT, EE and EL to around 25% in SE, LV and FI. The share of women 
varies  across  Member  States  between  around  3%  and  around  28%  for  non-executive  directors  and 
between  0%  and  around  21%  for  executive  directors.  See  Progress  report:  Women  in  economic 
decision-making  in  the  EU,  March  2012  (http://ec.europa.eu/justice/gender-equality/files/women-on-
boards_en.pdf). 
Some examples: 30% of women at the highest level of national public administrations, 33% of women 
among members of supreme courts. In research institutions, 22% of board members are women (2007). 
Only  national  central  banks  have  remained  against  all  trends  almost  exclusively  male  dominated 
strongholds: 83% of their board members are men and there is at the moment not a single female central 
bank governor in the EU. 
OJ L 331, 19.12.1984, p. 34 and OJ L 319, 10.12.1996, p. 11.  
See Progress report, footnote 1.  
From  October  2010  to  January  2012,  the  by  far  largest  increase  of  the  share  of  women  on  company 
boards  has  been  registered  in  France  (increase  of  10  percentage  points  to  22%),  where  companies 
reached the first target introduced by a new law in January 2011 (20% by 2014, 40% by 2017) ahead of 
schedule. Norway increased the female share of board members from 18% in 2006, when the binding 
target was introduced, to 40% within only three years. 

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directions.  Some  Member  States  have  privileged  a  "comply  or  explain"  model,  where 
companies not complying with a gender balance objective have to disclose the reasons for not 
doing so. Others establish an outright binding legal gender balance objective with sanctions. 
Some  Member  States  target  listed  companies,  while  others  focus  on  large  companies 
(regardless of listing) or state-owned companies only. Some Member States are focusing their 
measures  on  non-executive  board  members  of  listed  companies  while  others  cover  both 
executive and non-executive board members of listed companies. 

The  divergence  or  the  absence  of  regulation  at  national  level  does  not  only  lead  to  the 
discrepancies  in  the  number  of  women  among  executive  and  non-executive  directors  and 
different  rates  of  improvement  across  Member  States, but also  poses barriers to the internal 
market  by  imposing  divergent  corporate  governance  requirements  on  European  listed 
companies.  This  varied  evolution  of  national  legislations  has  led  to  a  fragmentation  of  the 
legislative frameworks across the EU, which translates into inconsistent legal obligations of 
difficult  comparability,  confusion  and  higher  costs  for  companies,  investors  and  other 
stakeholders,  and,  ultimately,  hinders  the  proper  functioning  of  the  internal  market.  In 
particular, these differences in legal and self-regulatory requirements for the composition of 
corporate  boards  can  lead  to  practical  complications  for  listed  companies  operating  across 
borders, notably when establishing subsidiaries or in mergers and acquisitions, as well as for 
candidates  for  board  positions.  The  current  lack  of  transparency  of  the  selection  procedures 
and qualification criteria for board positions in most Member States represents an important 
barrier  to  more  diversity  of  board  members  and  negatively  affects  both  board  candidates' 
careers and their freedom of  movement, as well as investor decisions. The opacity of board 
appointments makes it more difficult for women with the necessary qualifications for board 
positions to apply for such positions in general and even more so in another Member State. 
Lack of transparency on qualification criteria for company directors may also have a negative 
impact  on  investors'  confidence  in  a  company,  in  particular  in  cross-border  situations. 
Disclosing  relevant  information  on  gender  composition  of  boards  would  also  translate  into 
better  accountability  of  companies,  better  informed  and  sounder  decision-making,  better 
allocation of capital, and, ultimately, higher and more sustainable growth and employment in 
the EU. 

The under-utilisation of the skills of highly qualified women’s constitutes a loss of economic 
growth  potential.  Fully  mobilising  all  available  human  resources  will  be  a  key  element  to 
addressing the EU's demographic challenges, competing successfully in a globalised economy 
and ensuring a comparative advantage vis-à-vis third countries. Moreover, gender imbalance 
in the boards of publicly listed companies in the EU can be a missed opportunity at company 
level in terms of both corporate governance and financial company performance6. The core of 
the  problem  lies  in  the  persistence  of  multiple  barriers  faced  by  the  constantly  growing 
number of highly qualified women who are available for board seats7 on their way to the top 
positions  in  corporations.  The  reluctance  to  appoint  female  candidates  to  board  positions  is 

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Most  recently:  Credit  Suisse  Research  Institute  (August  2012),  "Gender  diversity  and  corporate 
performance".  Other  important  studies  include:  Catalyst  (2004),  "The  Bottom  Line:  Connecting 
Corporate Performance and Gender Diversity"; McKinsey (reports of 2007, 2008 and 2010), "Women 
Matter";  Deutsche  Bank  Research  (2010),  "Towards  gender-balanced  leadership";  Ernst  &  Young 
(2012), "Mixed leadership". 
Women  account  for  around  60%  of  university  graduates  in  the  EU.  More  importantly,  the  European 
Business Schools Women on Board Initiative was able to quickly identify more than 7000 'boardable' 
women  who  are  highly  qualified,  professionally  experiences  and  ready  to  take  over  a  board  position 
(http://www.edhec.com/html/Communication/womenonboard.html). 

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often rooted in gender stereotypes in recruitment and promotion, a male-dominated business 
culture and the lack of transparency in board appointment processes. These elements, which 
are often referred to in their entirety as a 'glass ceiling', undermine the optimal functioning of 
the labour market for top management positions throughout the EU. 

The persistent under-representation of women on boards is a key element of a broader lack of 
board diversity in general with its negative consequences. In boards with a predominance of 
members of one sex there is a considerably higher likelihood of a narrow "group think". This 
can contribute to the failure of an effective challenge of the management decisions, as the lack 
of diverse views, values, and competences may lead to less debate, ideas and challenge in the 
boardroom.  Insufficient  board  diversity  is  linked  above  all  to  insufficient  market  incentives 
for  companies  to  change  the  situation.  In  this  respect,  inadequate  recruitment  practices  for 
board members contribute to perpetuating the selection of members with similar profiles. The 
selection often draws on a too narrow pool of people, non-executive directors are still often 
recruited through an “old boys' network” from among business and personal contacts of the 
current  board  members.  The  inadequate  transparency  on  board  diversity  is  reinforcing  the 
problem, as the level of information and the extent to which this information is available to 
the public at large is often insufficient.  

As far as the objectives for board composition, the transparency of recruitment and reporting 
on  gender  diversity  of  boards  are  concerned,  the  identified  problems  affect  the  overall 
performance  of  companies,  their  accountability,  the  ability  of  investors  to  assess  and  factor 
appropriately  and  timely  all  relevant  information,  and  the  efficiency  of  the  EU  financial 
markets.  As  a  consequence,  the  internal  market  potential  for  sustainable  growth  and 
employment  may  not  be  fully  exploited.  Clear  requirements  as  regards  the  targets  to  be 
achieved by companies as regards the gender of the non-executive directors, the transparency 
of the recruitment process (qualifications criteria) and reporting obligations as regards gender 
diversity of boards are therefore necessary. 

Policy context 

Recently,  the  issue  of  enhancing  female  participation  in  economic  decision-making  has 
become  increasingly  prominent  in  the  national,  European  and  international  arenas,  focusing 
particularly on the economic dimension of gender diversity.  

The European Commission reaffirmed its support for an increased participation of women in 
positions of responsibility, both in its Women's Charter8 and its Strategy for Equality between 
Women  and  Men  2010-2015,9  whilst  also  publishing  several  reports  taking  stock  of  the 
situation.10  

In the European Pact for Gender Equality 2011-2020, adopted on 7 March 2011, the Council 
acknowledged  that  gender  equality  policies  are  vital  to  economic  growth,  prosperity  and 
competitiveness  and  urged  action  to  promote  the  equal  participation  of  women  and  men  in 
decision-making at all levels and in all fields, in order to make full use of all the talents. 

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COM(2010) 78 final. 
COM(2010) 491 final. 
See  Commission  report  'More  women  in  senior  positions',  January  2010;  Commission  Staff  Working 
Paper  'The  Gender  Balance  in  Business  Leadership',  March  2011  (SEC(2011)  246  final);  Progress 
Report  'Women  in  economic  decision-making  in  the  EU',  March  2012;  Commission  Staff  Working 
Document 'Progress on equality between women and men in 2011', April 2012 (SWD(2012) 85 final). 

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The  European  Parliament  repeatedly  called  upon  companies  and  Member  States  to  increase 
female  representation  of  women  in  decision-making  bodies  and  invited  the  Commission  to 
propose legislative quotas to attain the critical threshold of 30 per cent female membership of 
management bodies by 2015 and 40 per cent by 2020.11  

The European social partners have reaffirmed their commitment to further action in this area 
in their work programme for 2012-2014. 

Purpose of the proposal 

The  purpose  of  the  proposal  is  to  substantially  increase  the  number  of  women  on  corporate 
boards throughout the EU by setting  a  minimum  objective  of  a  40%  presence  of  the  under-
represented  sex  among  the  non-executive  directors  of  companies  listed  on  stock  exchanges 
and by requiring companies with a lower share of the under-represented sex among the non-
executive directors to introduce pre-established, clear, neutrally formulated and unambiguous 
criteria in selection procedures for those positions in order to attain that objective.  

The  proposal  seeks  to  promote  gender  equality  in  economic  decision-making  and  to  fully 
exploit  the  existing  talent  pool  of  candidates  for  more  equal  gender  representation  on 
company boards, thereby contributing to the Europe 2020 objectives. The proposed Directive 
will lead to breaking down the barriers that women face when aiming for board positions and 
to improved corporate governance, as well as enhanced company performance.  

Minimum  harmonisation  as  regards  both  a  requirement  for  listed  companies  to  take 
appointment  decisions  on  the  basis  of  an  objective  comparative  assessment  of  the 
qualifications of candidates and the setting of a quantitative objective for the gender balance 
among non-executives directors seems essential to ensure a competitive playing field and to 
avoid practical complications for listed companies in the internal market.  

The quantified objective of 40% set by this Directive only applies to non-executive directors 
in order to strike the right balance between the necessity to increase the gender diversity of 
boards on the one hand and the need to minimise interference with day-to-day management of 
a  company  on  the  other  hand.  Non-executive  directors  and  supervisory  boards  have  an 
essential  role  in  appointing  the  highest  level  of  management  and  shaping  the  company's 
human  resources  policy.  A  stronger  presence  of  the  under-represented  sex  among  non-
executive directors will therefore have positive ripple effects for gender diversity throughout 
the career ladder. 

The  proposal  focuses  on  publicly  listed  companies,  due  to  their  economic  importance  and 
high visibility. They set standards for the private sector at large. Moreover, they tend to have 
larger  boards  and  have  a  similar  legal  status  across  the  EU,  providing  the  necessary 
comparability of situations.  

The proposed objective of 40% for the minimum share of both sexes is in line with the targets 
currently under discussion and set out in a number of EU Member States/EEA countries. This 
figure is situated between the minimum of the 'critical mass' of 30%, which has been found 
necessary in order to have a sustainable impact on board performance and full gender parity 
(50%). 

11 

See e.g. Resolution of 6 July 2011 on women and business leadership (2010/2115(INI)), Resolution of 
13 March 2012 on equality between women and men in the European Union – 2011 (2011/2244(INI)). 

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Consistency  with  other  policies  and  objectives  of  the  Union  and  with  the  Charter  of 
Fundamental Rights of the European Union 

Equality between women and men is one of the Union's founding values and core aims under 
Articles 2 and 3(3) TEU. In accordance with Article 8 TFEU the Union shall aim to eliminate 
inequalities, and to promote equality, between men and women in all its activities.  

There  are  several  important  legal  measures  in  place  to  promote  equal  treatment  and  equal 
opportunities  of  men  and  women  in  matters  of  employment  and  occupation,  including  self-
employment12.  

The  proposal  is  consistent  with  the  Charter  of  Fundamental  Rights  of  the  European  Union 
('Charter').  It  will  help  to  promote  fundamental  rights,  particularly  those  related  to  equality 
between  women  and  men  (Article  23)  and  to  the  freedom  to  choose  an  occupation  (Article 
15). The proposal also touches upon the freedom to conduct a business (Article 16) and on the 
right  to  property  (Article  17).  It  does  so  in  a  justified  manner:  in  line  with  the  principle  of 
proportionality  the  proposal's  focus  is  on  non-executive  board  members  who  –  while  being 
important actors in particular in relation to corporate governance – are not involved in the day-
to-day running of operations.  

Article 21(1) of the Charter prohibits, in principle, any discrimination based on sex. Article 23 
recognises,  however,  that  the  principle  of  equality  does  not  prevent  the  maintenance  or 
adoption  of  measures  providing  for  specific  advantages  in  favour  of  the  under-represented 
sex.  

This principle of positive action is also recognised in Article 157(4) TFEU.  

The Court of Justice of the European Union (CJEU) has established the criteria that need to be 
met in order to reconcile the two concepts of formal equality of treatment and positive action 
aimed at bringing about de facto equality, both of which are recognised in the Charter as well 
as in Article 157 TFEU and in Article 3 of Directive 2006/54/EC. 

The criteria are: 

(1) 

the measures must concern a sector in which women are under-represented; 

(2) 

(3) 

they  can  only  give  priority  to  equally  qualified  female  candidates  over  male 
candidates: 

they  must  not  give  automatic  and  unconditional  priority  to  equally  qualified 
candidates, but must include a "saving clause" which includes the possibility of 
granting  exceptions  in  justified  cases  which  take  the  individual  situation  into 
account, in particular the personal situation of each candidate. 

The proposal is in compliance with these criteria (see Article 4(3)). 

12 

In particular Directives 2006/54/EC and 2010/41/EU.  

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2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

Consultation and expertise 

From  5  March  to  28  May  2012,  the  Commission  organised  a  public  consultation  to  gather 
stakeholders'  views  on  whether  any  action  should  be  taken  to  tackle  gender  imbalance  on 
corporate boards, and, if so, what kind of action. Of the total number of 485 replies, 161 were 
sent  by  individual  citizens  and  324  were  sent  by  organisations.  These  included  13  Member 
States,  3  regional  governments,  6  cities  or  municipalities,  79  companies  (both  large  listed 
companies and SMEs), 56 business associations at EU and national level, 53 NGOs (most of 
them  women's  organisations),  trade  unions,  professional  associations,  political  parties, 
associations  of  investors  and  shareholders,  actors  involved  in  corporate  governance  and 
others.  

There was a broad consensus on the urgent need to increase the share of women on company 
boards. By far the majority of respondents agreed that a gender-diverse workforce and board 
structure  is  a  driver  of  innovation,  creativity,  good  governance  and  market  expansion  for 
companies  and  that  it  would  be  short-sighted  to  leave  untapped  the  economic  potential  of 
qualified  women.  Views  varied  among  stakeholders  as  to  the  appropriate  means  to  bring 
about change. While some, predominantly the business stakeholders, favoured continued self-
regulation, other stakeholders, including trade unions, women organisations, other NGOs and 
a number of regional and municipal authorities, advocated a more ambitious approach in the 
form of binding objectives. Some stakeholders suggested focusing in the first place on non-
executive board  members  and  supervisory boards, as this would constitute a less significant 
interference with the daily management of companies, while executive board members should 
follow later.  

A 2011 Eurobarometer survey13 revealed that 88% of Europeans think that women should be 
equally  represented  in  company  leadership  positions.  When  given  the  possibility  to  choose 
between  three  options  to  achieve  gender  balance  on  company  boards,  opinion  is  divided 
between self-regulation by companies (31%), binding legal measures (26%), and non-binding 
measures  such  as  Corporate  Governance  Codes  and  Charters  (20%).  Nevertheless,  75%  of 
Europeans  are  in  favour  of  legislation  provided  that  it  takes  qualifications  into  account  and 
does not automatically favour members of one sex. 

Impact assessment 

The Impact Assessment (IA) analysed five policy options, fully described in the IA Report: 

– 

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Option 1: the baseline scenario (i.e. no further action at EU level); 

Special 
(http://ec.europa.eu/public_opinion/archives/eb_special_379_360_en.htm#376).  

(2012),  Women 

Eurobarometer 

376 

in 

decision-making 

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– 

– 

– 

– 

Option  2:  a  Commission  Recommendation  encouraging  Member  States  to  achieve 
the objective of at least 40% of board members of each gender by 2020; 

Option 3: a Directive introducing a binding objective of at least 40% of each gender 
by 2020 for non-executive directors; 

Option  4:  a  Directive  introducing  a  binding  objective  of  at  least  40%  of  board 
members of each gender by 2020 for non-executive directors and a flexible objective 
for executive directors, which would be set by the companies themselves; 

Option  5:  a  Directive  introducing  a  binding  objective  of  at  least  40%  of  board 
members of each gender by 2020 for both executive and non-executive directors. 

The outcome of the comparison of the consequences of the different policy options was that 
(i)  binding  measures  are  more  effective  in  meeting  the  policy  objectives  than  non-binding 
measures, (ii) measures that target both executive and non-executive board members are more 
effective  than  measures  only  targeting  one  group  and  (iii)  binding  measures  will  generate 
more societal and economic benefits than non-binding measures.  

At  the  same  time  the  effectiveness  of  the  different  policy  options  is  directly  linked  to  the 
extent of interference with the rights of the companies and the shareholders as their owners, 
including  their  fundamental  rights.  Compared  to  a  non-binding  measure  with  a  tangible  yet 
limited  effect,  a  substantial  increase  of  the  impact  in  terms  of  the  policy  objectives  would 
require an instrument with binding force, which would prescribe minimum requirements for 
the composition of boards.  

Binding measures would entail comparatively larger costs and administrative burdens which, 
however,  remain  rather  modest  in  comparison  to  the  projected  economic  benefits.  The 
administrative  burden  is  expected  to  be  minimal  for  all  policy  options,  given  that  these 
options  would  cover  only  publicly  listed  companies  which  are  expected  to  be  able  to  use 
existing reporting mechanisms.  

The current proposal opts for the increased effectiveness of fixed objectives and the resulting 
economic  and  wider  societal  benefits  in  relation  to  non-executive  board  members  which 
justify  a  higher  degree  of  interference  with  fundamental  rights.  The  proposal  refrains  from 
establishing a fixed binding objective for executive board members, due to the greater need 
for  sector-specific  knowledge  and  experience  in  the  day-to-day  management  of  a  company. 
However,  companies  should  be  obliged  to  make  commitments  in  relation  to  executive 
directors that reflect their specific circumstances, and to report on the compliance with these 
commitments. The proposal is therefore based on Option 4.  

3. 

LEGAL ASPECTS OF THE PROPOSAL 

Legal base 

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Article  157(3)  TFEU  is  the  legal  basis  for  any  binding  measures  aimed  at  ensuring  the 
application of the principle of equal opportunities and equal treatment of men and women in 
matters of employment and occupation, including positive action.  

The proposal is based on Article 157(3) TFEU.  

Subsidiarity  

Measures introduced  by some  Member States to strengthen the gender balance on company 
boards vary widely, and a substantial number of Member States, in particular those where the 
share  of  women  among  directors  is  particularly  low,  have  not  taken  any  action  in  this  area. 
They do not show any willingness or face resistance to act on their own initiative. At the same 
time, there are discrepancies in terms of the numbers of women on boards in Member States, 
with the key indicator ranging from 3% to 27% - a situation which jeopardises the attainment 
of  the  fundamental  objective  of  gender  equality  in  economic  decision-making  across  the 
Union.  

The projections in the IA report based on comprehensive information on existing or planned 
legislative and self-regulatory initiatives in this area in all Member States show that without 
EU  action  the  female  representation  in  boards  of  publicly  listed  companies  is  expected  to 
evolve from 13.7% in 2012 to 20.4% (20.84% excluding SMEs) in 2020 for the EU. Only one 
Member State (France) will have achieved a 40% female representation in boards by 2020 as 
the result of national binding quota legislation. Only 7 more Member States - Finland, Latvia, 
the Netherlands, Slovakia, Spain, Denmark and Sweden - are estimated to reach 40% before 
2035. In addition to being unsatisfactory from a gender equality perspective, this would not be 
sufficient to bring about the “critical mass” of women on boards across the Union which, as 
research shows, is needed to generate positive effects on company performance. Based on this 
scenario,  the  EU  as  a  whole  is  not  expected  to  even  achieve  40%  of  women  on  boards  by 
2040. Irrespective of the general possibility for Member States to act efficiently, the concrete 
indications of Member States regarding their intentions, including their replies to the public 
consultation and the projections  based  on  all available information, clearly demonstrate that 
action  by  Member  States  individually  will  not  achieve  the  objective  of  a  more  balanced 
gender  representation  on  company  boards  in  line  with  the  policy  objectives  set  out  in  this 
proposal by 2020 or at any point in the foreseeable future.  

This situation entails a certain number of risks for the attainment of the fundamental objective 
of gender equality across the Union. The Founding Treaties intended to create a competitive 
level-playing  field  between  Member  States  by  enshrining  the  principle  of  equal  pay  and  of 
gender equality on the labour market, to avoid any downward competition between Member 
States in labour and equal treatment matters. Member States may indeed hesitate to regulate in 
this  area  on  their  own,  as  they  could  perceive  a  risk  of  putting  their  own  companies  at  a 
disadvantage  with  companies  from  other  Member  States.  This  perception,  reinforced  by 
pressure  from  the  business  community,  represents  an  additional  major  obstacle  preventing 
Member States from taking adequate action. 

Furthermore, scattered and divergent regulation at national level is bound to create practical 
problems in the functioning of the internal market. Different company law rules and sanctions 
for not complying with a national binding quota, such as exclusion from public procurement, 
could lead to complications in business life and have a deterrent effect on companies' cross-
border investments and the establishment of subsidiaries in other Member States. Diverging 
rules or the absence of rules on the selection procedure for the key positions of non-executive 

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board  members  without  any  minimum  standards  and  the  impact  of  these  differences  for 
corporate governance and the assessment of corporate governance by investors could further 
lead to problems in the functioning of the internal market.  

The potential for competitiveness and growth inherent in making full use of the talent pool of 
the best qualified women for board positions can be realised more effectively, by reasons of 
scale,  if  all  Member  States  engage  in  that  direction,  in  particular  those  where  figures  are 
currently low and no action has been taken or even envisaged. Only an EU-level measure can 
effectively  help  to  ensure  a  competitive  level-playing  field  throughout  the  Union  and  avoid 
practical  complications  in  business  life  by  means  of  minimum  harmonisation  of  corporate 
governance requirements relating to appointment decisions based on objective qualifications 
criteria in order to attain gender balance among non-executives directors. 

It can therefore be concluded that the objectives of the envisaged action cannot be sufficiently 
achieved by the Member States on their own and may be better achieved through coordinated 
action  at  EU  level  rather  than  through  national  initiatives  of  varying  scope,  ambition  and 
effectiveness. The proposal therefore complies with the principle of subsidiarity. 

Proportionality 

Non-binding  measures  such  as  past  EU-level  recommendations  and  calls  for  self-regulation 
have  not  achieved  and  cannot  be  expected  to  achieve  the  objective  of  improving  gender 
equality in economic decision-making throughout the EU. Further-reaching action to be taken 
at EU-level is therefore necessary to achieve those aims. This should, however, not go beyond 
what is strictly required to achieve sustainable progress  in  the share of women on company 
boards, without impinging on the functioning of private companies and the market economy. 

This  minimum  harmonisation  proposal  is  limited  to  setting  common  objectives,  giving 
Member States sufficient freedom to determine how they should be best achieved at national 
level,  taking  into  account  national,  regional  or  local  circumstances  including  national 
company  law  and  company  board  recruitment  practices.  In  particular,  the  proposal  requires 
only  such  changes  to  national  company  law  that  are  strictly  necessary  for  the  minimum 
harmonisation  of  requirements  for  the  appointment  decisions  and  it  respects  the  different 
board structures across Member States. It does not cover small and medium-sized enterprises 
(SMEs), for which such measures could  represent a disproportionate  burden. In  addition, as 
explained above, the proposal establishes quantitative objectives only for non-executive board 
members, thereby considerably limiting interference in the daily management of the company. 
As  non-executive  directors  perform  mainly  supervisory  tasks,  it  is  also  easier  to  recruit 
qualified candidates from outside the company or the specific sector – a consideration which 
is of importance for areas of the economy where members of a particular sex are especially 
under-represented in the workforce.  

The  temporary  nature  of  the  proposed  Directive  (see  Article  10)  underpins  its  compliance 
with the principles of subsidiarity and proportionality.  

Choice of instrument 

A directive is the instrument that best ensures a coherent minimum level of gender diversity 
among non-executive directors in boards of publicly listed companies across the EU, whilst 
allowing Member States to adjust the detailed regulation to their specific situations in terms of 
national  company  law  and  to  choose  the  most  appropriate  means  of  enforcement  and 

EN 

10 

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sanctions. It also allows individual Member States to go beyond the minimum standard, on a 
voluntary basis. 

European Economic Area 

This  is  a  text  of  relevance  to  the  European  Economic  Area  and  the  Directive  will  be 
applicable to the non-EU member States of the European Economic Area following a decision 
of the EEA Joint Committee. 

4. 

BUDGETARY IMPLICATION  

The proposal has no implications for the Union budget. 

5. 

DETAILED EXPLANATION OF THE SPECIFIC PROVISIONS 

Article 1: Purpose 

This provision states the aim of this Directive.  

Article 2: Definitions 

the  Committees  of 

This  Article  sets  out  the  key  definitions,  which  are  based  on  those  in  Commission 
Recommendation 2005/162/EC on the role of non-executive or supervisory directors of listed 
the  (supervisory)  board14,  on  Commission 
companies  and  of 
Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and 
medium-sized  enterprises15  in  relation  to  the  definition  of  SMEs,  and  on  Commission 
Directive  2006/111/EC  of  16  November  2006  on  the  transparency  of  financial  relations 
between Member States and public undertakings, as well as on financial transparency within 
certain undertakings16 in relation to the definition of public undertakings.  

The definitions ensure in particular that the Directive is equally applicable to various systems 
of board structures for listed companies that exist in the Member States, i.e. to a dual ('two-
tier')  system  in  which  there  are  separate  management  and  supervisory  boards,  to  a  unitary 
('one-tier') system combining the management and supervisory functions in one single board, 
as  well  as  to  mixed  systems  featuring  elements  of  'one-tier'  and  'two-tier'  systems  or  giving 
companies an option between different models. 

The  definition  of  'director'  clarifies  that  the  objectives  set  by  the  directive  cover  all  non-
executive  directors,  including  employee  representatives  in  those  Member  States  where  a 
certain proportion of the non-executive directors can or must be appointed or elected by the 
company's  workforce  and/or  organisations  of  workers  pursuant  to  national  law  or  practice 
while the practical procedures for ensuring that the objectives provided for in this Directive 
are attained should be defined by the Member States concerned (see Recital 21). 

Article 3: Exclusion of small and medium-sized enterprises 

14 
15 
16 

OJ L 52, 25.2.2005, p. 51. 
OJ L 124, 20.5.2003, p. 36. 
OJ L 318, 17.11.2006, p. 17. 

EN 

11 

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This Article excludes from the scope of the Directive listed companies which are small and 
medium-sized enterprises (SMEs), as defined by Commission Recommendation 2003/361/EC 
of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises.17  

Article 4: Objectives with regard to non-executive directors 

Paragraph  1  imposes  on  listed  companies  which  do  not  have  a  presence  of  the  under-
represented  sex  of  at  least  40  per  cent  of  non-executive  directors  an  obligation  to  make  the 
appointments to those positions on the basis of a comparative analysis of the qualifications of 
each  candidate,  by  applying  pre-established,  clear,  neutrally  formulated  and  unambiguous 
criteria,  in  order  to  attain  the  said  percentage  at  the  latest  by  1  January  2020.  A  shorter 
deadline  for  achieving  the  objective  (1  January  2018)  is  set  for  listed  companies  which  are 
public  undertakings  within  the  meaning  of  Article  2(b)  of  Commission  Directive 
2006/111/EC  of  16  November  2006  on  the  transparency  of  financial  relations  between 
Member  States  and  public  undertakings  as  well  as  on  financial  transparency  within  certain 
undertakings.18  Member  States  exercise  a  dominant  influence  over  such  companies  and 
therefore have more instruments to bring about the change more rapidly. 

Paragraph 2 specifies the method of calculation of the exact number of non-executive director 
positions  necessary  to  meet  the  objective  mentioned  in  paragraph  1.  The  exact  number  of 
board positions necessary to comply with the objective should be the number closest to 40 per 
cent, whether below or above that threshold, but at the same time listed companies should not 
be  obliged  to  appoint  members  of  the  under-represented  sex  to  half  or  more  of  the  non-
executive board positions in order to avoid excessive constraints.  

Paragraph  3  imposes  a  preference  rule  with  the  aim  of  meeting  the  objective  laid  down  in 
paragraph 1. This preference rule provides that, in the presence of equally qualified candidates 
of both sexes priority shall be given to the candidate of the under-represented sex unless an 
objective assessment taking account of all criteria specific to the individual candidates tilts the 
balance in favour of the candidate of the other sex. This procedural requirement is necessary 
to  ensure  that  the  objectives  comply  with  the  case-law19  of  the  Court  of  Justice  of  the 
European  Union  concerning  positive  action.  The  requirements  laid  down  in  this  paragraph 
should be met at the appropriate stage of the selection process depending on national law and 
the articles of association of listed companies.  

Paragraph 4 imposes a disclosure obligation and a burden of proof rule applicable in cases of 
challenges to the selection procedure by an unsuccessful candidate.  

Paragraph 5 provides for a possibility of justifying non-compliance with the objective where 
the members of the under-represented sex represent less than 10 per cent of the workforce.  

Paragraph 6 provides that the objective laid down in Paragraph 1 can also be met where the 
members  of  the  under-represented  sex  hold  at  least  one  third  of  all  director  positions, 
irrespective of whether they are executive or non-executive. 

Article 5: Additional measures by companies and reporting 

17 
18 
19 

OJ L 124, 20.05.2003, p. 36 
OJ L 318, 17.11.2006, p. 17.  
C-450/93:  Kalanke  (1995  ECR  I-3051),  C-409/95:  Marschall  (1997  ECR  I-6363),  C-158/97:  Badeck 
(2000 ECRI I-1875), C-407/98: Abrahamsson (2000 ECR I-5539). 

EN 

12 

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Paragraph 1 imposes an obligation for listed companies to undertake individual commitments 
regarding  the  representation  of  both  sexes  among  executive  directors  to  be  achieved  by  1 
January  2020,  or  by  1  January  2018  in  the  case  of  listed  companies  which  are  public 
undertakings. 

Paragraph 2 imposes an obligation for listed companies to provide and publish information on 
the gender composition of their boards and on compliance with Article 4(1) and Article 5(1) 
on a yearly basis.  

Paragraph  3  imposes  on  listed  companies  which  fail  to  meet  the  objectives  concerning  the 
non-executive  directors  or  commitments  concerning  executive  directors  an  additional 
obligation to explain the reasons and to include the description of measures taken and planned 
in order to meet the objectives or commitments in the future.  

Paragraph  4  concerns  the  competences  of  the  national  equality  bodies  established  under 
Directive 2006/54/EC. 

Article 6: Sanctions 

This  Article  obliges  Member  States  to  lay  down  rules  on  sanctions  applicable  in  case  of 
breach  of  this  Directive.  These  sanctions  must  be  effective,  proportionate  and  dissuasive.  A 
non-exhaustive list of possible concrete measures is set out in paragraph 2. 

Article 7: Minimum requirements 

This provision states the minimum harmonisation nature of the Directive.  

Article 8: Implementation 

Member  States  are  under  an  obligation  to  adopt  the  relevant  transposition  measures  within 
two  years  from  the  date  of  adoption  of  the  Directive.  The  Article  further  specifies  the 
obligations  concerning  those  measures  and  their  communication  to  the  Commission. 
Paragraph 3 enables Member States which before the entry into force of this Directive have 
already taken measures to ensure a more balanced representation of women and men among 
the non-executive directors of listed companies to suspend the application of the procedural 
requirements related to appointments contained in Article 4(1), (3), (4) and (5), provided that 
they can demonstrate that the measures taken are of equivalent efficacy in order to attain the 
objective set in Article 4(1). 

Articles 9, 10 and 11: Review; Entry into force and expiry; Addressees 

The Directive imposes a reporting obligation on Member States. The Commission is obliged 
to  review  and  report  on  the  application  of  the  Directive  every  two  years,  in  particular  on 
whether the aims of the Directive have been achieved.  

The  objectives  remain  in  force  only  until  sustainable  progress  in  gender  composition  of 
boards  has  been  achieved  and  the  Directive  includes  a  'sunset  clause'  to  that  effect.

EN 

13 

   EN 

2012/0299 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on improving the gender balance among non-executive directors of companies listed on 
stock exchanges and related measures 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 157(3) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Economic and Social Committee,20 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

Equality between women and men is one of the Union's founding values and core aims 
under Article 2 and Article 3(3) of the Treaty on European Union. Under the terms of 
Article 8 of the Treaty on the Functioning of the European Union (hereinafter referred 
to  as  the  Treaty),  the  Union  shall  aim  to  eliminate  inequalities,  and  to  promote 
equality,  between  men  and  women  in  all  its  activities.  Article  157(3)  of  the  Treaty 
provides a legal basis for the adoption of Union measures to ensure the application of 
the principle of equal opportunities and equal treatment of men and women in matters 
of employment and occupation.  

(2) 

The  principle  of  positive  action  and  its  importance  for  achieving  effective  equality 
between women and men in practice are recognised in Article 157(4) of the Treaty and 
in  Article  23  of  the  Charter  of  Fundamental  Rights  of  the  European  Union,  which 
provides that equality between women and men must be ensured in all areas and that 

20 

OJ C , , p. . 

EN 

14 

   EN 

                                                 
the  principle  of  equality  shall  not  prevent  the  maintenance  or  adoption  of  measures 
providing for specific advantages in favour of the under-represented sex.  

Council  Recommendation  84/635/EEC  of  13  December  1984  on  the  promotion  of 
positive  action  for  women21  recommended  that  Member  States  should  take  steps  to 
ensure  that  positive  action  includes,  as  far  as  possible,  actions  having  a  bearing  on 
active  participation  by  women  in  decision-making  bodies.  Council  Recommendation 
96/694/EC of 2 December 1996 on the balanced participation of women and men in 
the decision-making process22 recommended that Member States should encourage the 
private  sector  to  increase  the  presence  of  women  at  all  levels  of  decision-making, 
notably  by  the  adoption  of,  or  within  the  framework  of,  equality  plans  and  positive 
action programmes. 

In recent years the European Commission has presented several reports taking stock of 
the  situation  concerning  gender  diversity  in  economic  decision-making.23  The 
Commission  has  encouraged  publicly  listed  companies  in  the  European  Union  to 
increase  the  number  of  women  on  their  boards  by  self-regulatory  measures  and  to 
make concrete voluntary commitments in that regard. 24 In its Women's Charter25 of 5 
March 2010, the European Commission underlined that women still do not have full 
access to the sharing of power and decision-making in political and economic life and 
reaffirmed  its  commitment  to  use  its  powers  to  promote  a  fairer  representation  of 
women  and  men  in  positions  of  responsibility.  Improving  the  gender  balance  in 
decision-making  was  defined  by  the  Commission's  strategy  for  equality  between 
women and men 2010-201526 as one of its priority tasks.  

In the European Pact for Gender Equality 2011-2020, which was adopted on 7 March 
2011,  the  Council  acknowledged  that  gender  equality  policies  are  vital  to  economic 
growth, prosperity and competitiveness, reaffirmed its commitment to close the gender 
gaps with a view to meeting the objectives of the Europe 2020 Strategy, especially in 
three areas of great relevance to gender equality, namely employment, education and 
social  inclusion,  and  urged  action  to  promote  the  equal  participation  of  women  and 
men in decision-making at all levels and in all fields, in order to make full use of all 
available talent. 

The European Parliament, in its resolution on women and business leadership of 6 July 
201127,  urged  companies  to  attain  the  critical  threshold  of  30  per  cent  female 
membership of management bodies by 2015 and 40 per cent by 2020. It called on the 
Commission, if the steps taken by companies and the Member States were found to be 
inadequate, to propose legislation by 2012, including quotas. The European Parliament 

OJ L 331, 19.12.1984, p. 34. 
OJ L 319, 10.12.1996, p.11. 
Commission  report  'More  women  in  senior  positions'  (2010);  Commission  Staff  Working  Paper  'The 
Gender Balance in Business Leadership' of 1.3.2011 (SEC(2011) 246 final); Progress Report 'Women 
in economic decision-making in the EU' of 5.3.2012; Commission Staff Working Document 'Progress 
on equality between women and men in 2011' of 16.4.2012 (SWD(2012) 85 final). 
'Women on the Board Pledge for Europe', IP/11/242. 
COM(2010) 78 final. 
COM(2010) 491 final. 
2010/2115(INI). 

(3) 

(4) 

(5) 

(6) 

21 
22 
23 

24 
25 
26 
27 

EN 

15 

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(7) 

(8) 

(9) 

reiterated  that  call  for  legislation  in  its  resolution  of  13  March  2012  on  equality 
between women and men in the European Union – 2011.28 

The efficient use of human capital is the most important determinant of an economy's 
competitiveness  and  is  key  to  addressing  the  EU's  demographic  challenges,  to 
competing  successfully  in  a  globalised  economy  and  to  ensuring  a  comparative 
advantage vis-à-vis third countries. The pool of highly trained and qualified women is 
constantly  growing  as  evidenced  by  the  fact  that  60  per  cent  of  university  graduates 
are  female.  A  continued  failure  to  draw  on  this  pool  in  appointments  to  economic 
decision-making  positions  would  amount  to  a  failure  to  fully  exploit  skilled  human 
capital.  

At  company  level,  it  is  widely  acknowledged  that  the  presence  of  women  on  boards 
improves  corporate  governance,  because  team  performance  and  the  quality  of 
decision-making  are  enhanced  due  to  a  more  diverse  and  collective  mind-set 
incorporating  a  wider  range  of  perspectives  and  therefore  reaching  more  balanced 
decisions.  Numerous  studies  have  also  shown  that  there  is  a  positive  relationship 
between  gender  diversity  at  top  management  level  and  a  company's  financial 
performance  and  profitability.  Enhancing  female  representation  on  the  boards  of 
publicly  listed  companies  in  the  Union  can  therefore  have  a  positive  impact  on  the 
performance of companies concerned. 

Existing  evidence  also  shows  that  labour  market  equality  can  improve  economic 
growth  substantially.  Enhancing  female  presence  in  the  boardrooms  of  listed 
companies  in  the  Union  not  only  affects  the  women  appointed  to  boards,  but  also 
contributes to attracting female talent to the company and ensuring a greater presence 
of women at all levels of management and in the workforce. Therefore, a higher share 
of  women  on  company  boards  has  a  positive  impact  on  closing  both  the  gender 
employment gap and the gender pay gap. Making full use of the existing female talent 
pool would constitute a marked improvement in terms of return on education for both 
individuals and the public sector. Female under-representation in the board rooms of 
publicly  listed  companies  in  the  EU  is  a  missed  opportunity  in  terms  of  achieving 
long-term sustainable growth for Member States' economies at large.  

(10)  Despite  the  existing  Union  legislation  aimed  at  preventing  and  combating  sex 
discrimination,  the  Council  recommendations  aimed  specifically  at  increasing  the 
presence of women in economic decision-making and Union-level actions encouraging 
self-regulation,  women  continue  to  be  strongly  outnumbered  by  men  in  the  highest 
decision-making bodies of companies throughout the Union. In the private sector and 
especially  in  listed  companies  this  gender  imbalance  is  particularly  significant  and 
acute.  The  Commission's  key  indicator  of  gender  representation  on  corporate  boards 
shows  that  the  proportion  of  women  involved  in  top-level  business  decision-making 
remains very low. In January 2012, women occupied on average just 13.7 per cent of 
board  seats  in  the  largest  publicly  listed  companies  in  Member  States.  Among  non-
executive directors only 15 per cent were women. 

(11)  The  proportion  of  women  on  company  boards  is  progressing  very  slowly,  with  an 
average annual increase of just 0.6 percentage points during the past years. The rate of 

28 

2011/2244(INI). 

EN 

16 

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improvement has differed in individual Member States and has led to highly divergent 
results.  Much  more  significant  progress  was  noted  in  the  Member  States  where 
binding  measures  have  been  introduced.  Growing  discrepancies  between  Member 
States are likely to increase given the very different approaches pursued by individual 
Member  States  to  increase  the  representation  of  females  on  boards  that  are  being 
pursued by individual Member States.  

(12)  The scattered and divergent regulation or the absence of regulation at national level as 
regards  the  gender  balance  on  boards  of  listed  companies  does  not  only  lead  to 
discrepancies  in  the  number  of  women  among  non-executive  directors  and  different 
rates  of  improvement  across  Member  States,  but  also  poses  barriers  to  the  internal 
market by imposing divergent corporate governance requirements on European listed 
companies.  Those  differences  in  legal  and  self-regulatory  requirements  for  the 
composition  of  corporate  boards  can  lead  to  practical  complications  for  listed 
companies  operating  across  borders,  notably  when  establishing  subsidiaries  or  in 
mergers and acquisitions, as well as for candidates for board positions.  

(13)  The current lack of transparency of the selection procedures and qualification criteria 
for  board  positions  in  most  Member  States  represents  a  significant  barrier  to  more 
gender  diversity  among  board  members  and  negatively  affects  both  the  board 
candidates' careers and freedom of movement, as well as investor decisions. Such lack 
of  transparency  prevents  potential  candidates  for  board  positions  from  applying  to 
boards  where  their  qualifications  would  be  most  required  and  from  challenging 
gender-biased  appointment  decisions,  thus  restricting  their  freedom  of  movement 
within  the  internal  market.  On  the  other  hand,  investors  have  different  investment 
strategies that require information linked also to the expertise and competence of the 
board  members.  More  transparency  in  the  qualification  criteria  and  the  selection 
procedure for board members enables investors to better assess the company's business 
strategy and to take informed decisions. 

(14)  While  this  Directive  does  not  aim  to  harmonise  national  laws  on  the  selection 
procedures  and  qualification  criteria  for  board  positions  in detail, the introduction of 
certain  minimum  standards  as  regards  the  requirement  for  listed  companies  without 
balanced  gender  representation  to  take  appointment  decisions  for  non-executive 
directors on the basis of an objective comparative assessment of the qualifications of 
candidates  in  terms  of  suitability,  competence  and  professional  performance  is 
necessary in order to attain gender balance among non-executives directors. Only an 
EU-level  measure  can  effectively  help  to  ensure  a  competitive  level-playing  field 
throughout the Union and avoid practical complications in business life. 

(15)  The Europe 2020 Strategy for Smart, Sustainable and Inclusive Growth29 ascertained 
that increased female labour force participation is a precondition for boosting growth 
and for tackling demographic challenges in Europe. The Strategy set a headline target 
of  reaching  an  employment  rate  of  75  per  cent  for  women  and  men  aged  20-64  by 
2020, which can only be reached if there is a clear commitment to gender equality and 
a reinforced effort to tackle all barriers to women's participation in the labour market. 
The  current  economic  crisis  has  magnified  Europe's  ever-growing  need  to  rely  on 
knowledge, competence and innovation and to make full use of the pool of available 

29

COM(2010) 2020 final. 

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17 

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talent.  Enhancing  female  participation  in  economic  decision-making,  on  company 
boards  in  particular,  is  expected  to  have  a  positive  spill-over  effect  on  female 
employment in the companies concerned and throughout the whole economy. 

(16)  The  Union  should  therefore  aim  to  increase  the  presence  of  women  on  company 
boards, in order both to boost economic growth and the competitiveness of European 
companies  and  to  achieve  effective  gender  equality  on  the  labour  market.  This  aim 
should  be  pursued  through  minimum  requirements  on  positive  action  in  the  form  of 
binding  measures  aiming  at  attaining  a  quantitative  objective  for  the  gender 
composition of boards of listed companies, in the view of the fact that Member States 
and other countries which have chosen this or a similar method have achieved the best 
results  in  reducing  the  under-representation  of  women  in  economic  decision-making 
positions.  

(17)  Companies  listed  on  stock  exchanges  enjoy  a  particular  economic  importance, 
visibility  and  impact  on  the  market  as  a  whole.  The  measures  provided  for  in  this 
Directive should therefore apply to listed companies, which are defined as companies 
incorporated in a Member State whose securities are admitted to trading on a regulated 
market  within  the  meaning  of  Article  4(1)  (14)  of  Directive  2004/39/EC  of  the 
European  Parliament  and  of  the  Council  of  21  April  2004  on  markets  in  financial 
instruments,30 in one or more Member States. These companies set standards for the 
economy  in  its  entirety  and  their  practices  can  be  expected  to  be  followed  by  other 
types  of  companies.  The  public  nature  of  listed  companies  justifies  that  they  be 
regulated to a greater extent in the public interest.  

(18)  This Directive should not apply to micro, small and medium-sized enterprises (SMEs), 
as defined by Commission Recommendation 2003/361/EC of 6 May 2003 concerning 
the  definition  of  micro,  small and  medium-sized  enterprises,31 even if they are listed 
companies. 

(19)  There  are  various  systems  of  board  structures  for  listed  companies  in  the  Member 
States,  the  main  distinction  being  between  a  dual  ('two-tier')  system  with  both  a 
management  board  and  a  supervisory  board  and  a  unitary  ('one-tier')  system 
combining the management and supervisory function in a single board. There are also 
mixed  systems,  which  feature  aspects  of  both  systems  or  give  companies  an  option 
between different models. The measures provided for in this Directive should apply to 
all board systems in the Member States.  

(20)  All  board  systems  distinguish  between  executive  directors,  who  are  involved  in  the 
daily management of the company, and non-executive directors who are not involved 
in  the  daily  management,  but  do  perform  a  supervisory  function.  The  quantitative 
objectives  provided  for  in  this  Directive  should  apply  only  to  the  non-executive 
directors in order to strike the right balance between the need to increase the gender 
diversity  of  boards  and  the  need  to  minimise  interference  with  the  day-to-day 
management of a company. As the non-executive directors perform supervisory tasks, 
it is also easier to recruit qualified candidates from outside the company and to a large 
extent  also  from  outside  the  specific  sector  in  which  a  company  operates  –  a 

30 
31 

OJ L 145, 30.4.2004, p. 1. 
OJ L 124, 20.5.2003, p. 36. 

EN 

18 

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consideration  which  is  of  importance  for  areas  of  the  economy  where  members  of  a 
particular sex are especially under-represented in the workforce. 

(21) 

In  several  Member  States,  a  certain  proportion  of  the  non-executive  directors  can  or 
must  be  appointed  or  elected  by  the  company's  workforce  and/or  organisations  of 
workers pursuant to national law or practice. The quantitative objectives provided for 
in  this  Directive  should  apply  to  all  non-executive  directors  including  employee 
representatives.  However,  the  practical  procedures  for  ensuring  that  those  objectives 
are  attained,  taking  into  account  the  fact  that  some  non-executive  Directors  are 
employee representatives, should be defined by the Member States concerned.  

(22)  Listed companies in the Union should be imposed obligations of means providing for 
appropriate procedures with a view of meeting specific objectives regarding the gender 
composition of their boards. Those listed companies in whose boards members of the 
under-represented  sex  hold  less  than  40  per  cent  of  non-executive  director  positions 
should  make  the  appointments  to  those  positions  on  the  basis  of  a  comparative 
analysis  of  the  qualifications  of  each  candidate,  by  applying  pre-established,  clear, 
neutrally formulated and unambiguous criteria, in order to attain the said percentage at 
the  latest  by  1  January  2020.  Therefore,  the  Directive  establishes  the  objective  of  at 
least 40 per cent of non-executive directors of the under-represented sex by that date. 
This objective in principle only concerns the overall gender diversity among the non-
executive  directors  and  does  not  interfere  with  the  concrete  choice  of  individual 
directors from a wide pool of male and female candidates in each individual case. In 
particular, it does not exclude any particular candidates for director positions, nor does 
it impose any individual directors on companies or shareholders. The decision on the 
appropriate board members thus remains with the companies and shareholders. 

(23)  Member States exercise a dominant influence over listed companies which are public 
undertakings  within 
the  meaning  of  Article  2(b)  of  Commission  Directive 
2006/111/EC of 16 November 2006 on the transparency of financial relations between 
Member  States  and  public  undertakings,  as  well  as  on  financial  transparency  within 
certain  undertakings.32  Due  to  that  dominant  influence,  they  have  the  instruments  at 
their  disposal  to  bring  about  the  necessary  change  more  rapidly.  Therefore,  in  such 
companies the objective of least 40 per cent of non-executive directors of the under-
represented sex should be set at an earlier date.  

(24)  Determining  the  number  of  non-executive  director  positions  necessary  to  meet  the 
objective requires further specification since for most board sizes it is mathematically 
possible only to go beyond or remain below the exact share of 40 per cent. Therefore, 
the number of board positions necessary to meet the objective should be the number 
closest to 40 per cent. At the same time, in order to avoid discrimination of the initially 
over-represented  sex,  listed  companies  should  not  be  obliged  to  appoint  members  of 
the under-represented sex to half or more of the non-executive board positions. Thus, 
for example, members of the under-represented sex should hold at least one position 
on boards with three or four non-executive directors, at least two positions on boards 
with  five  or  six  non-executive  directors,  and  at  least  three  positions  on  boards  with 
seven or eight non-executive directors.  

32 

OJ L 318, 17.11.2006, p. 17. 

EN 

19 

   EN 

                                                 
(25) 

(26) 

In its case-law33 on positive action and the compatibility thereof with the principle of 
non-discrimination on ground of sex (now also laid down in Article 21 of the Charter 
of Fundamental Rights of the European Union), the Court of Justice of the European 
Union accepted that priority may in certain cases be given to the under-represented sex 
in  selection  for  employment  or  promotion,  provided  that  the  candidate  of  the  under-
represented  sex  is  equally  qualified  as  the  competitor  of  the  other  sex  in  terms  of 
suitability, competence and professional performance, that the priority is not automatic 
and unconditional but may be overridden if reasons specific to an individual candidate 
of the other sex tilt the balance in that candidate's favour, and that the application of 
each candidate is subject of an objective assessment which takes account of all criteria 
specific to the individual candidates. 

In line with that case-law, Member States should ensure that the selection of the best 
qualified candidates for non-executive directors is based on a comparative analysis of 
the  qualifications  of  each  candidate  on  the  basis  of  pre-established,  clear,  neutrally 
formulated  and  unambiguous  criteria.  Examples  of  types  of  selection  criteria  that 
companies  could  apply  include  professional  experience  in  managerial  and/or 
supervisory tasks, knowledge in specific relevant areas such as finance, controlling or 
human  resources  management,  leadership  and  communication  skills  and  networking 
abilities. Priority should be given to the candidate of the under-represented sex if that 
candidate is equally qualified as the candidate of the other sex in terms of suitability, 
competence  and  professional  performance,  and  if  an  objective  assessment  taking 
account of all criteria specific to the individual candidates does not tilt the balance in 
favour of a candidate of the other sex.  

(27)  The  methods of recruiting and appointing directors differ from one Member State to 
another  and  from  one  company  to  another.  They  may  involve  the  pre-selection  of 
candidates to be presented to the shareholders' assembly, for example by a nomination 
committee, the direct appointment of directors by individual shareholders or a vote in 
the  shareholders'  assembly  on  individual  candidates  or  lists  of  candidates.  The 
requirements concerning the selection of candidates should be met at the appropriate 
stage  of  the  selection  process  in  accordance  with  national  law  and  the  articles  of 
association  of  the  listed  companies  concerned.  In  this  respect,  this  Directive  only 
establishes  a  minimum  harmonisation  of  selection  procedures,  making  it  possible  to 
apply the conditions provided for by the case-law of the Court of Justice with a view 
to  attaining  the  objective  of  a  more  balanced  gender  representation  in  the  boards  of 
listed companies.  

(28)  This  Directive  aims  to  improve  the  gender  balance  among  directors  of  companies 
listed on stock exchanges and thus to contribute to the realisation of the principle of 
equal  treatment  between  men  and  women,  recognised  as  a  fundamental  right  of  the 
Union. Listed companies should therefore be required to disclose, upon the request of 
an unsuccessful candidate, not only the qualification criteria upon which the selection 
was based, but also the objective comparative assessment of those criteria and, where 
relevant, the considerations tilting the balance in favour of a candidate who is not of 
the under-represented sex . These limitations to the right to respect for private life with 
regard  to  the  processing  of  personal  data,  recognised  by  the  Articles  7  and  8  of  the 

33 

C-450/93:  Kalanke  (1995  ECR  I-3051),  C-409/95:  Marschall  (1997  ECR  I-6363),  C-158/97:  Badeck 
(2000 ECRI I-1875), C-407/98: Abrahamsson (2000 ECR I-5539). 

EN 

20 

   EN 

                                                 
Charter,  and  the  obligation  for  listed  companies  to  supply  that  information,  upon 
request,  to  the  unsuccessful  candidate,  are  necessary  and,  in  conformity  with  the 
principle of proportionality, genuinely meet recognised objectives of general interest. 
They  are  therefore  in  line  with  the  requirements  for  such  limitations  laid  down  in 
Article 52(1) of the Charter and with the relevant case-law of the Court of Justice.  

(29)  Where  an  unsuccessful  candidate  of  the  under-represented  sex  establishes  the 
presumption they were equally qualified as the appointed candidate of the other sex, 
the listed company should be required to demonstrate the correctness of the choice.  

(30)  Member States should provide for effective, proportionate and dissuasive sanctions for 
breaches  of  this  Directive,  which  could  include,  inter  alia,  administrative  fines  and 
nullity or annulment declared by a judicial body of the appointment or of the election 
of non-executive directors made contrary to the national provisions adopted pursuant 
to Article 4(1).  

(31)  Since the gender composition of the workforce has a direct impact on the availability 
of candidates of the under-represented sex, Member States may provide that where the 
members of the under-represented sex make up less than 10 per cent of the workforce 
the company concerned should not be required to meet the objective laid down in this 
Directive. 

(32)  Since listed companies should aim to increase the proportion of the under-represented 
sex  in  all  decision-making  positions,  Member  States  may  provide  that  the  objective 
laid down in this Directive should be considered to be met where listed companies can 
show that members of the under-represented sex hold at least one third of all director 
positions, irrespective of whether they are executive or non-executive. 

(33) 

In addition to the measures relating to non-executive directors, and with a view also to 
improving  the  gender  balance  among  directors  involved  in  daily  management  tasks, 
listed  companies  should  be  required  to  make  individual  commitments  regarding  the 
representation of both sexes among executive directors, to be achieved at the latest by 
1 January 2020. These commitments should aim to achieve tangible progress from the 
individual company's current position towards better gender balance.  

(34)  Member States should require listed companies to provide information on the gender 
composition of their boards as well as information on how they managed to meet the 
objectives  laid  down  in  this  Directive,  on  a  yearly  basis  to  the  competent  national 
authorities  in  order  to  enable  them  to  assess  the  progress  of  each  listed  company 
towards  gender  balance  among  directors.  Such  information  should  be  published  and, 
where  the  company  in  question  has  not  met  the  objective,  it  should  include  a 
description of the measures that it has taken so far and intends to take in the future in 
order to meet the objective. 

(35)  Member  States  may  have  already  taken  measures  providing  for  means  to  ensure  a 
more balanced representation of women and men in company boards before the entry 
into force of this Directive. Such Member States should have an opportunity to apply 
those measures in place of the procedural requirements relating to appointments where 
they  can  demonstrate  that  the  measures  taken  are  of  equivalent  efficacy  in  order  to 
attain the objective of a presence of the under-represented sex of at least 40 per cent 
among non-executive directors of listed companies at the latest by 1 January 2020 or 

EN 

21 

   EN 

at  the  latest  by  1  January  2018  in  case  of  listed  companies  which  are  public 
undertakings. 

(36)  This Directive respects fundamental rights and observes the principles recognised by 
the Charter of Fundamental Rights of the European Union. In particular, it contributes 
to  the  fulfilment  of  the  right  to  equality  between  women  and  men  (Article  23  of  the 
Charter), the freedom to choose an occupation and the right to engage in work (Article 
15  of  the  Charter).  This  Directive  seeks  to  ensure  full  respect  for  the  right  to  an 
effective remedy and a fair hearing (Article 47 of the Charter). The limitations on the 
exercise of the freedom to conduct business (Article 16 of the Charter) and of the right 
to  property  (Article  17(1)  of  the  Charter)  respect  the  essence  of  those  rights  and 
freedoms  and  are  necessary  and  proportionate.  They  genuinely  meet  objectives  of 
general  interest  recognised  by  the  Union  and  the  need  to  protect  the  rights  and 
freedoms of others.  

(37)  While some Member States have taken regulatory action or encouraged self-regulation 
with mixed results, the majority of Member States have not taken action or indicated 
their  willingness  to  act  in  a  way  that  would  bring  about  sufficient  improvement. 
Projections based on a comprehensive analysis of all available information on past and 
current trends as well as intentions show that a balanced gender representation among 
non-executive board  members across the Union in line with  the objectives set out in 
this Directive will not be achieved by Member States acting individually at any point 
in  the  foreseeable  future.  In  the  light  of  those  circumstances  and  given  the  growing 
discrepancies  between  Member  States  in  terms  of  the  representation  of  women  and 
men on company boards, the gender balance on corporate boards across the Union can 
only be improved through a common approach, and the potential for gender equality, 
competitiveness  and  growth  can  be  better  achieved  through  coordinated  action  at 
Union  level  rather  than  through  national  initiatives  of  varying  scope,  ambition  and 
effectiveness. Since the objectives of this Directive cannot be sufficiently achieved by 
the Member States and can, therefore, by reason of the scale and effect of action, be 
better achieved at Union level, the Union may adopt measures in accordance with the 
principle of subsidiarity as set out in Article 5 of the Treaty on European Union.  

(38) 

(39) 

In accordance with the principle of proportionality, as set out in that same Article, this 
Directive  is  limited  to  setting  common  objectives  and  principles  and  does  not  go 
beyond  what  is  necessary  in  order  to  achieve  those  objectives.  Member  States  are 
given sufficient freedom to determine how the objectives laid down in this Directive 
should best be achieved taking national circumstances into account, in particular rules 
and  practices  concerning  recruitment  for  board  positions.  This  Directive  does  not 
interfere  with  the  possibility  for  companies  to  appoint  the  most  qualified  board 
members, and it grants a sufficiently long period of adaptation for all listed companies. 

In  accordance  with  the  principle  of  proportionality,  the  objective  to  be  met  by  listed 
companies  should  be  limited  in  time  and  remain  in  force  only  until  sustainable 
progress has been achieved in the gender composition of boards. For that reason, the 
Commission should regularly review the application of this Directive and report to the 
European Parliament and the Council. The Directive is due to expire on 31 December 
2028.  The  Commission  should  assess,  in  its  review,  if  there  is  a  need  to  extend  the 
duration of the Directive beyond that period. 

EN 

22 

   EN 

(40) 

In  accordance  with  the  Joint  Political  Declaration  of  Member  States  and  the 
Commission of 28 September 2011 on explanatory documents,34 Member States have 
undertaken,  in  justified  cases,  to  accompany  the  notification  of  their  transposition 
measures  with  one  or  more  documents  explaining  the  relationship  between  the 
components  of  a  directive  and  the  corresponding  parts  of  national  transposition 
instruments. With regard to this Directive, the legislator considers the transmission of 
such documents to be justified. 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Subject matter 

This  Directive  lays  down  measures  to  ensure  a  more  balanced  representation  of  men  and 
women  among  the  non-executive  directors  of  listed  companies  by  establishing  measures 
aimed  at  accelerated  progress  towards  gender  balance  while  allowing  companies  sufficient 
time to make the necessary arrangements.  

For the purposes of this Directive, the following definitions shall apply: 

Article 2 
Definitions 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

‘listed company’ means a company incorporated in a Member State whose securities 
are admitted to trading on a regulated market within the meaning of Article 4(1) (14) 
of Directive 2004/39/EC, in one or more Member States;  

‘board’ means any administrative, managerial or supervisory body of a company; 

‘director’ means any member of a board, including an employees' representative; 

‘executive  director’  means  any  member  of  a  unitary  board  who  is  engaged  in  the 
daily management of the company and any member of a managerial board in a dual 
board system; 

‘non-executive  director’  means  any  member  of  a  unitary  board  other  than  an 
executive director and any member of a supervisory board in a dual board system; 

‘unitary  board’  means  a  single  board  that  combines  the  management  and  the 
supervisory functions of a company; 

‘dual  board  system’  means  a  system  in  which  the  management  and  supervisory 
functions of a company are carried out by separate boards; 

‘small and medium-sized enterprise’ or ‘SME’ means a company which employs less 
than  250  persons  and  has  an  annual  turnover  not  exceeding  EUR  50  million  or  an 
annual balance sheet total not exceeding EUR 43 million, or, for an SME which is 
incorporated  in  a  Member  State  whose  currency  is  not  the  euro,  the  equivalent 
amounts in the currency of that Member State; 

34 

OJ C 369, 17.12.2011, p. 14. 

EN 

23 

   EN 

                                                 
(9) 

‘public  undertaking’  means  an  undertaking  over  which  the  public  authorities  may 
exercise  directly  or  indirectly  a  dominant  influence  by  virtue  of  their  ownership 
thereof, their financial participation therein, or the rules which govern it. A dominant 
influence  on  the  part  of  the  public  authorities  shall  be  presumed  when  these 
authorities, directly or indirectly in relation to an undertaking: 

– 

– 

– 

hold the major part of the undertaking’s subscribed capital; or 

control  the  majority  of  the  votes  attaching  to  shares  issued  by  the 
undertakings; or 

can  appoint  more  than  half  of  the  members  of  the  undertaking's 
administrative, managerial or supervisory body. 

Article 3 
Exclusion of small and medium-sized enterprises 

This Directive shall not apply to small and medium-sized enterprises ('SMEs'). 

1. 

2. 

3. 

4. 

5. 

Article 4 
Objectives with regard to non-executive directors 

Member  States  shall  ensure  that  listed  companies  in  whose  boards  members  of  the 
under-represented  sex  hold  less  than  40  per  cent  of  the  non-executive  director 
positions  make  the  appointments  to  those  positions  on  the  basis  of  a  comparative 
analysis  of  the  qualifications  of  each  candidate,  by  applying  pre-established,  clear, 
neutrally formulated and unambiguous criteria, in order to attain the said percentage 
at  the  latest  by  1  January  2020  or  at  the  latest  by  1  January  2018  in  case  of  listed 
companies which are public undertakings.  

The number of non-executive director positions necessary to meet the objective laid 
down in paragraph 1 shall be the number closest to the proportion of 40 per cent, but 
not exceeding 49 per cent. 

In order to attain the objective laid down in paragraph 1, Member States shall ensure 
that,  in  the  selection  of  non-executive  directors,  priority  shall  be  given  to  the 
candidate  of  the  under-represented  sex  if  that  candidate  is  equally  qualified  as  a 
candidate  of  the  other  sex  in  terms  of  suitability,  competence  and  professional 
performance, unless an objective assessment taking account of all criteria specific to 
the individual candidates tilts the balance in favour of the candidate of the other sex. 

Member  States  shall  ensure  that  listed  companies  are  obliged  to  disclose,  on  the 
request  of  an  unsuccessful  candidate,  the  qualification  criteria  upon  which  the 
selection  was  based,  the  objective  comparative  assessment  of  those  criteria  and, 
where relevant, the considerations tilting the balance in favour of a candidate of the 
other sex.  

Member States shall take the necessary measures, in accordance with their national 
judicial  systems,  to  ensure  that  where  an  unsuccessful  candidate  of  the  under-
represented sex establishes facts from which it may be presumed that that candidate 
was equally qualified as the appointed candidate of the other sex, it shall be for the 

EN 

24 

   EN 

6. 

7. 

1. 

2. 

3. 

4. 

listed  company  to  prove  that  there  has  been  no  breach  of  the  rule  laid  down  in 
paragraph 3.  

Member States may provide that listed companies where the members of the under-
represented sex represent less than 10 per cent of the workforce are not subject to the 
objective laid down in paragraph 1.  

Member States may provide that the objective laid down in paragraph 1 is met where 
listed companies can  show  that members of the under-represented sex hold at least 
one third of all director positions, irrespective of whether they are executive or non-
executive. 

Article 5 
Additional measures by companies and reporting 

Member States shall ensure that listed companies undertake individual commitments 
regarding gender-balanced representation of both sexes among executive directors to 
be achieved at the latest by 1 January 2020, or, in case of listed companies which are 
public undertakings, by 1 January 2018.  

Member  States  shall  require  listed  companies  to  provide  information  to  the 
competent national authorities, once a year as from [two years after adoption], about 
the gender representation on their boards, distinguishing between non-executive and 
executive directors and about the measures taken in view of the objectives laid down 
in Article 4(1) and in paragraph 1 of this Article, and to publish that information in 
an appropriate and accessible manner on their website. 

Where a listed company does not meet the objectives laid down in Article 4(1) or its 
own  individual  commitments  taken  pursuant  to  paragraph  1  of  this  Article,  the 
information referred to in paragraph 2 of this Article shall include the reasons for not 
reaching the objectives or commitments and a description of the measures which the 
company  has  adopted  or  intends  to  adopt  in  order  to  meet  the  objectives  or 
commitments. 

Member States shall take the necessary measures to ensure that the body or bodies 
designated  in  accordance  with  Article  20  of  Directive  2006/54/EC  of  the  European 
Parliament and of the Council of 5 July 2006 on the implementation of the principle 
of  equal  opportunities  and  equal  treatment  of  men  and  women  in  matters  of 
employment  and  occupation  (recast)35  are  also  competent  for  the  promotion, 
analysis,  monitoring  and  support  of  gender  balance  on  the  boards  of  listed 
companies. 

Article 6 
Sanctions 

1. 

Member States shall lay down rules on sanctions applicable to infringements of the 
national  provisions  adopted  pursuant  to  this  Directive  and  shall  take  all  necessary 
measures to ensure that they are applied.  

35 

OJ L 204, 26.7.2006, p. 23. 

EN 

25 

   EN 

                                                 
2. 

The  sanctions  must  be  effective,  proportionate  and  dissuasive  and  may  include  the 
following measures:  

(a) 

administrative fines; 

(b)  nullity or annulment declared by a judicial body of the appointment or of the 
election  of  non-executive  directors  made  contrary  to  the  national  provisions 
adopted pursuant to Article 4(1). 

Article 7 
Minimum requirements 

Member States  may introduce  or maintain provisions which  are  more favourable than those 
laid  down  in  this  Directive  to  ensure  a  more  balanced  representation  of  men  and  women  in 
respect of companies incorporated in their national territory, provided those provisions do not 
create unjustified discrimination, nor hinder the proper functioning of the internal market.  

1. 

2. 

3. 

4. 

1. 

Article 8 
Implementation 

Member  States  shall  adopt  and  publish,  by  [two  years  after  adoption] at  the  latest, 
the  laws,  regulations  and  administrative  provisions  necessary  to  comply  with  this 
Directive.  They  shall  forthwith  communicate  to  the  Commission  the  text  of  those 
provisions. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

Without prejudice to Article 4(6) and (7), Member States which before the entry into 
force  of  this  Directive  have  already  taken  measures  to  ensure  a  more  balanced 
representation  of  women  and  men  among  the  non-executive  directors  of  listed 
companies  may  suspend  the  application  of  the  procedural  requirements  relating  to 
appointments contained in Article 4(1), (3), (4) and (5), provided that it can be shown 
that those measures enable members of the under-represented sex to hold at least 40 
per cent of the non-executive director positions of listed companies by at the latest 1 
January 2020, or at the latest 1 January 2018 for listed companies which are public 
undertakings. 

The Member State in question shall notify this information to the Commission. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 9 
Review 

Member States shall communicate to the Commission by 1 January 2017 at the latest 
and  every  two  years  thereafter  a  report  on  the  implementation  of  this  Directive. 
These  reports  shall  include,  amongst  others,  comprehensive  information  about  the 
measures  taken  with  a  view  to  attaining  the  objectives  laid  down  in  Article  4(1), 

EN 

26 

   EN 

information  provided  in  accordance  with  Article  5(2)  and  information  about 
individual commitments taken by listed companies pursuant to Article 5(1). 

Member  States  having  suspended  pursuant  to  Article  8(3)  the  application  of  the 
procedural  requirements  relating  to  appointments  contained  in  Article  4(1),  (3),  (4) 
and  (5)  shall  include  information  in  the  reports  mentioned  in  paragraph  1 
demonstrating the concrete results obtained by the national measures  referred to in 
Article 8(3). The Commission shall then issue a specific report ascertaining whether 
those  measures  effectively  enable  members  of  the  under-represented  sex  to  hold  at 
least 40 per cent of the non-executive director positions by 1 January 2018 for listed 
companies  which  are  public  undertakings,  and  by  1  January  2020  for  listed 
companies which are not public undertakings. The first such report shall be issued by 
the  Commission  by  1  July  2017,  and  subsequent  reports  shall  be  issued  within  six 
months after notification of the respective national reports under paragraph 1. 

Member States in question shall ensure that listed companies, which by applying the 
national measures referred to in Article 8(3) have not appointed or elected members 
of  the  under-represented  sex  for  at  least  40  per  cent  of  the  non-executive  director 
positions of their boards by 1 January 2018, where they are public undertakings, or 
by  1  January  2020,  where  they  are  not  public  undertakings,  apply  the  procedural 
requirements relating to appointments contained in Article 4(1), (3), (4) and (5)  with 
effect respectively from those dates. 

The  Commission  shall  review  the  application  of  this  Directive  and  report  to  the 
European Parliament and the Council by 31 December 2021 at the latest and every 
two  years  thereafter.  The  Commission  shall  evaluate  in  particular  whether  the 
objectives of this Directive have been achieved. 

In its report, the Commission shall assess whether, in the light of developments in the 
representation of men and women in the boards of listed companies and at different 
levels of decision-making throughout the economy and taking into account whether 
the progress made is sufficiently sustainable, there is a need to extend the duration of 
this Directive beyond the date specified in Article 10(2) or to amend it.  

Article 10 
Entry into force and expiry 

This  Directive  shall  enter  into  force  on  the  [twentieth]  day  following  that  of  its 
publication in the Official Journal of the European Union. 

It shall expire on 31 December 2028. 

2. 

3. 

4. 

1. 

2. 

EN 

27 

   EN 

Article 11 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

28 

   EN