From 1 January 2022, at least one-third of the members of the supervisory board of a listed company must be women. Large companies must set targets in order to achieve a more balanced ratio of men and women in top positions.
It is a hot topic that is much talked and written about: more gender diversity at the top of companies. From 2013 to 1 January 2020, a statutory target was set for a balanced ratio on management and supervisory boards (Raad van Commissarissen) of large companies. There were no sanctions for not achieving the target. Unfortunately, this legislation did not generate the desired result.
The new legislation offers a better prospect for more diversity at the top of companies. We have already gone into detail about this in our article ‘Women at the top’ in Lady Justice, the magazine of the Women Lawyers Section of Primerus.
On 28 September 2021, the Dutch Senate adopted the Act on a more balanced ratio between men and women on management and supervisory boards. Following our participation in the #GEOvirtual panel on equal pay and closing the gender pay gap, where we talked about women in top positions and creating equal opportunities in the workplace, this was extremely good news.
Firstly, the Act regulates the appointment of new members of the supervisory board of listed companies. The composition of a supervisory board is unbalanced if it does not consist of at least one-third women and at least one-third men. If women are represented for less than one-third on a supervisory board, no man may be appointed because this appointment does not contribute to a more balanced ratio. If a man is appointed, the appointment is null land void. The same applies if women are appointed, while less than one-third of the supervisory board consists of men. So there is a clear sanction for not meeting the diversity requirement.
Secondly, large companies have to set targets for more gender balance between men and women on the management and supervisory board and in other top positions in the company. Listed companies do not have to do this for the supervisory board. These targets have to be appropriate and ambitious. This means that ultimately a 50/50 representation of men and women should be aimed for. These targets apply even if the management board and the supervisory board consist of one (and the same) person.
The company has to report to the Social and Economic Council within ten months after the end of each financial year. The report has to contain the following information:
The targets are therefore only subject to a comply-or-explain rule without any further sanctions, as under the former legislation.
The women’s quota will enter into for on 1 January 2022 and will last for eight years. This Act takes us one step closer to more gender diversity in business. In any case, it symbolizes a very positive development and will hopefully create greater awareness of the importance of gender diversity in all companies.
If you find this topic interesting, please also read our article on recognizing gender differences as a means to achieve more equality in the workplace. In an article for Stare Decisis, the magazine of the Young Lawyers Section of Primerus, I discuss in more detail the importance of equal pay for women and men.
Do you still have questions about the new Act or its consequences for your company? We will be happy to advise you. You can also contact us for other employment and corporate law issues and disputes. Please contact:
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