European companies may be required to appoint women to 40 percent of seats on supervisory boards by 2020 under a European Union proposal to be published next month, according to a person familiar with the plan.
Companies would face sanctions including fines, exclusion from government tenders and a ban on public subsidies, if they fail to comply, said the person who asked not to be identified because the plan isn’t yet public. The sanctions, which would also allow authorities to revoke other board appointments, would be set by national governments.
The EU draft law to redress the gender imbalance would apply to all listed companies with more than 250 employees and annual sales of more than 50 million euros ($63 million), the person said. State-owned companies would be required to introduce the quotas by 2018 to set an example for other firms.
Some 13.7 percent of board seats in the EU belong to women after a 1.9 percentage point increase between October 2010 and January 2012, the European Commission said in a report in March. EU Justice Commissioner Viviane Reding last year asked businesses to appoint more women to company boards. LVMH Moet Hennessy Louis Vuitton SA is among only 24 companies that signed Reding’s pledge to increase female board members to 30 percent by 2015 and 40 percent by 2020.
The quotas would apply to supervisory or non-executive board members, the person said. Companies that don’t meet the quotas could argue their case if they weren’t able to appoint enough qualified women.
The commission’s proposal will need the backing of most of the EU’s 27 member states and the European Parliament, who can both amend a draft law before it becomes final.
The EU’s plans were reported by the Financial Times earlier.
Spain has a target for 40 percent of female representation on large company boards by 2015, and France passed a law last year to impose a 20 percent quota by 2014 and 40 percent by 2017 for companies with at least 500 employees and annual sales of 50 million euros. Norway, which is not part of the EU, in 2003 set a quota for at least 40 percent of corporate board seats to be filled by women.