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Eversheds comment: Threat of EU legislation on boardroom diversity looming large

  • Europe


    As the Davies review publishes its report into boardroom diversity, the EU Commission has announced that it is pressing ahead with plans for new legislation to force companies to improve the gender balance of their boards, predicting that the Women on Boards Directive should be adopted in 2016. Simon Rice-Birchall, partner and head of discrimination law at law firm Eversheds, comments:

    “The threat of EU legislation has been looming for some time. The Commission thinks listed companies should be aiming for at least 40% female representation amongst non-executive directors. The regime it has proposed would force companies falling short of the target to select a woman for a vacancy in preference to a man, when faced with a choice between equally qualified candidates.

    "A number of countries, including the UK, have opposed the measure, blocking its progress. However, more and more member states are opting to bring in their own quota laws; so that resistance may well start to wane. If the Commission does manage to get the Directive adopted in 2016 then EU states will probably have until 2018 before they have to implement the new regime. Affected companies will then need to navigate a legal minefield, treading a fine and imprecise line between complying with the new requirements and avoiding sex discrimination against male candidates.

    "The proposed Directive could have a significant impact for the UK as the Commission’s 40% target will apply beyond the FTSE 100. To date, the focus of the Davies review has been on driving up representation in the biggest listed companies, and for those companies the 40% target for non-executive directors, though stretching, appears to be within sight. Outside the FTSE 100, however, greater challenges remain.”

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