COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of a directive of the European Parliament and of the Council on improving the gender balance among directors of listed companies and related measures.
Date: 2022-10-18
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: appointment of staff, board of directors, female work, gender equality, managing director, private sector, recruitment, stock-exchange listing, women's rights

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   EUROPEAN COMMISSION  Brussels, 18.10.2022  COM(2022) 534 final 2012/0299 (COD)  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT  pursuant to Article 294(6) of the Treaty on the Functioning of the European Union  concerning the position of the Council on the adoption of a directive of the European Parliament and of the Council on improving the gender balance among directors of listed companies and related measures.  (Text with EEA relevance)  
 
 
2012/0299 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

position of the Council on the adoption of a directive of the European Parliament and of 
the Council on improving the gender balance among directors of listed companies and 
related measures. 

(Text with EEA relevance) 

1. 

BACKGROUND 

Date of transmission of the proposal to the European Parliament and 
to  the  Council  (document  COM/2012/614  final  -  2012/0299 
(COD)): 

16 November 2012 

Date  of  the  opinion  of  the  European  Economic  and  Social 
Committee: 

13 February 2013 

Date of the opinion of the European Committee of the Regions: 

30 May 2013 

Date of the position of the European Parliament, first reading: 

20 November 2013 

Date of transmission of the amended proposal: 

N/A 

Date of adoption of the position of the Council: 

17 October 2022 

2. 

OBJECTIVE OF THE PROPOSAL FROM THE COMMISSION 

The  aim  of  the  proposal  for  a  directive  is  to  improve  gender-balanced  representation  on 
corporate  boards  of  large  listed  companies.  It  sets  up  an  objective  of  40%  non-executive 
directors  of  the  under-represented  sex  and  requires  companies  to  introduce  clear  and 
unambiguous criteria for their selection procedures. The objective is to be attained by 30 June 
2026. Member States may set a lower objective (33%) provided it would cover both executive 
and non-executive directors. Companies that are subject to the 40% target for non-executive 
directors  would  have  to  undertake  individual  commitments  regarding  the  representation  of 
both sexes among executive directors. 

Whilst Member States will have to oblige listed companies to strive for an attainment of the 
quantitative  targets,  failure  to  achieve  these  targets  would  not  result  in  sanctions.  Rather, 
those companies that do not achieve the targets would need to establish a transparent selection 
process  for  board  positions,  which  must  be  based  on  clear  qualification  criteria  to  be 
determined  by  the  companies  in  advance  of  the  selection  process.  In  addition,  they  would 

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need 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. 

The  transparent  selection  procedure  will  need  to  include  a  preference  rule  with  the  aim  of 
meeting the objectives: in the presence of equally qualified candidates of both sexes, priority 
shall in principle be given to the candidate of the under-represented sex. This requirement is 
based on an objective assessment taking into account all the selection criteria applied to the 
individual candidates, in line with the case-law of the Court of Justice of the European Union 
concerning positive action. 

Procedural  measures  are  put  in  place  to  support  candidates  that  would  wish  to  challenge  a 
selection procedure, such as a reversal of the burden of proof rule.  

Member  States  will  be  obliged  to  put  in  place  penalties  applicable  in  case  of  breach  of  the 
obligations set out in the directive. These penalties will have to be effective, proportionate and 
dissuasive.  

The  Directive  takes  into  account  well-functioning  national  systems  by  allowing  Member 
States  to  suspend  the  application  of  the  procedural  requirements  where  they  have  equally 
effective national measures in place. 

3. 

COMMENTS ON THE POSITION OF THE COUNCIL 

In line with the political agreement, the Council’s first reading position introduces a number 
of changes to the Commission’s proposal, mainly in order to: 

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clarify  the  scope  of  the  procedural  obligations  to  reach  gender  balance  –  to  ensure 
that all stages of the board members’ selection process are covered;  

clarify the scope of the directive through the definition of listed company, including 
by referring to the ‘registered office’;  

delete the possibility to exempt companies with a workforce particularly dominated 
by one sex i.e. companies where the members of the under-represented sex make up 
less than 10% of the workforce; 

streamline the deadlines so that public and private undertakings are subjected to the 
same deadlines for achieving the targets; 

shorten  the  deadline  by  which  the  quantitative  targets  should  be  achieved  by 
companies and set it at 30 June 2026; 

include in the directive the detailed conditions to allow Member States to suspend the 
procedural requirements if they have equally effective national measures in place;  

strengthen the reporting and monitoring as part of the review clause: the Commission 
will not only report on whether the conditions to apply the suspension clause are and 
remain fulfilled, but it will also assess whether those Member States making use of 
that  clause  continue  making  progress  towards  a  more  balanced  representation 
between  women  and  men  among  non-executive  director  positions  or  all  director 
positions  in  listed  companies.  If  no  further  progress  is  made,  the  revision  clause 
invites the Commission to consider a revision of the directive.   

The  Council’s  position  fully  reflects  the  political  agreement  reached  between  the  European 
Parliament  and  the  Council  on  7  June  2022.  The  Commission  considers  that  these 
amendments to the proposed directive are in line with its original policy objectives. Therefore, 
the Commission can endorse the Council’s position. 

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4. 

CONCLUSION 

The Commission supports the Council position. 

The  adoption  of  this  Directive  will  mark  an  important  milestone  towards  effective  gender 
equality in the European Union. 

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