A European Union proposal that 40 percent of company supervisoryboards be made up of women will be amended to ease potentialsanctions in an effort to win over EU officials, a person familiarwith the matter said.

EU Justice Commissioner Viviane Reding will make minor changesto allow governments more flexibility on penalties againstcompanies that don't meet the target by 2020, said the person, whodeclined to be identified because the matter is private. Under thedraft rules, companies would also have to explain selectionprocedures if challenged by unsuccessful candidates who claim theywere discriminated against.

U.K. business secretary Vince Cable and ministers from nineother countries wrote the European Commission last month seekingmore time for national efforts aimed at encouraging femaleappointments to take effect. News of Reding's amendment wasfollowed by a European Parliament committee opinion yesterdayopposing appointment of Luxembourg's Yves Mersch to the EuropeanCentral Bank's Executive Board. The committee said it was unhappywith the lack of female candidates for the job.

Reding's quota proposal has the support of eight of the 27European commissioners, including economy commissioner Olli Rehnand antitrust chief Joaquin Almunia, who are to discuss the matterat a commission meeting today, the person said. Seven others areopposed, two of whom won't attend. It isn't clear if commissionerswill vote on the draft, as such decisions are usually acceptedunanimously without a vote, the person said.

Some 13.7 percent of corporate board seats in the EU are held bywomen, following a 1.9 percent increase between October 2010 andJanuary 2012, the commission said in a report in March.

Reding, who declined to comment on the amendment, last yearasked businesses to appoint more women to company boards. LVMH MoetHennessy Louis Vuitton SA is among 24 companies that signed herpledge to increase female board members to 30 percent by 2015, and40 percent by 2020.

The EU draft law would apply to all listed companies with morethan 250 employees and annual sales of more than 50 million euros($65 million). Reding earlier suggested there be sanctions againstcompanies that couldn't reach the target, including fines,exclusion from government tenders and a ban on public subsidies,the person said.

Spain has a 40 percent target for female representation on largecompany boards by 2015, and France passed a law last year to imposea 20 percent quota by 2014, and 40 percent by 2017, for companieswith at least 500 employees and annual sales of 50 millioneuros.

Set Quotas

Norway, which isn't part of the EU, set a quota in 2003 for atleast 40 percent of corporate board seats to be filled bywomen.

If accepted by the commission, the proposal will need thebacking of most of the EU's 27 member states and the EuropeanParliament, which can amend a draft law before it becomes final.about a lack of female candidates for the job.

Yesterday's non-binding opinion on Mersch's appointment was bythe European Parliament's economic and monetary affairs committeein Strasbourg, France. The recommendation on Mersch, Luxembourg'scentral bank governor, goes to the full Parliament for a vote Oct.25.

Two women, Sirkka Haemaelaeinen of Finland and GertrudeTumpel-Gugerell of Austria, previously sat on the ECB's six-memberExecutive Board. If the five men currently there serve their fullterms, another position won't become available until June 2018 whenVice President Vitor Constancio retires.

“We are objecting to the EU's most powerful institution beingrun by only men for the next six years,” Sharon Bowles, who chairsthe committee, said in an e-mailed statement.

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