The new legislation proposed by the European Commission supposes attaining a 40% objective of the under-represented sex in non-executive board-member positions in publicly listed companies, with the exception of small and medium enterprises. The Directive will establish that companies which have a lower share of the under-represented sex among the non-executive directors will be required to make appointments to those positions on the basis of a comparative analysis of the qualifications of each candidate, by applying clear, gender-neutral and unambiguous criteria.

The European Commission proposed a new legislation with the aim of attaining a 40% objective of the under-represented sex (women) in non-executive board-member positions in publicly listed companies, with the exception of small and medium enterprises. According to the Commission, despite an intense public debate and some voluntary initiatives at national and European level, the situation has not changed significantly in recent years. In March 2011, the Commission debated with European business leaders how to increase women representation into corporate direction boards.

In particular, the Directive proposed supposes that companies which have a lower share (less than 40%) of the under-represented sex among the non-executive directors will be required to make appointments to those positions on the basis of a comparative analysis of the qualifications of each candidate, by applying clear, gender-neutral and unambiguous criteria. Given equal qualification, priority shall be given to the under-represented sex. A report by the Commission in March 2012 showed that, across the EU, company boards are currently dominated by one gender. The objective of attaining at least 40% membership of the under-represented sex for the non-executive positions should thus be met by 2020 while public undertakings – over which public authorities exercise a dominant influence – will have two years less, until 2018. The proposal is expected to apply to around 5 000 listed companies in the European Union.

Member States will have to lay down appropriate and dissuasive sanctions for companies in breach of the Directive. The 40% objective applies to publicly listed companies, due to their economic importance and high visibility. The proposal does not apply to small and medium enterprises. The 40% objective is focused on non-executive director posts. In line with better regulation principles, the Directive is a temporary measure and is set to expire in 2028.