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Europe’s listed companies will be forced to reserve at least 40 percent of their non-executive director board seats for women by 2020 or face fines and other sanctions under a proposal being drafted by the European Commission, revealed the Financial Times on Sept. 3rd. Although several EU countries—including France, Italy, Spain and the Netherlands—have already adopted their own national quotas, such hard limits have run into fierce resistance notably by Britain and Sweden, which currently have no limits. The European Commission proposal, expected to be formally introduced next month by Viviane Reding, EU Justice Commissioner, should be adopted through the EU’s majority voting process, which implies that the UK and Sweden will only be able to resist such compulsory measures if they are able to assemble a large enough blocking minority.

According to the draft, companies larger than 250 employees or with more than €50m in revenues would be required to report annually on the gender make-up of their boards. Those that miss the mandatory quota would be subject to administrative fines or be barred from state aid and contracts.

Ms Reding has decided to push the legislation because progress in improving gender balance on corporate boards is, in her view, too slow. Large companies have so far resisted mandatory quotas and urge Ms. Reding to put off the proposal, arguing that one-size-fits-all quotas interfere disproportionately with the freedom of companies and shareholders to organize their own affairs.

The EU has been attempting for nearly over a decade to boost the number of women in business through a series of voluntary actions. Whereas no one—not even Ms Reding—actually likes fixed quotas as compulsory legal instruments, recent cases highlight however that only countries that have adopted minimum thresholds have seen a marked improvement on gender balance on their corporate boards.
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This article was written by Christophe de Callatay from the Association of Executive Search Consultants (AESC).
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