When workers in New York protested in defence of their rights on March 8, 1857, it was unlikely that the greatest dreamer and optimist among them imagined that the time would come when the public would discuss "gender balance among directors of listed companies."
That's exactly what's happening today. Almost 170 years later, all of us – women and men – are reading the texts of Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and on related measures (Text with EEA relevance), and we are thinking about how the directive will affect business, equality of the individual, of society.
The Bulgarian Industrial Association actively participates in the interdepartmental working groups, which discuss the way in which the Directive should be transposed into Bulgarian law.
Directive (EU) 2022/2381 applies to all listed companies other than micro, small and medium-sized enterprises (SMEs). It is envisaged that Member States will ensure that listed companies are subject to one of the following objectives, to be achieved by 30 June 2026:
- members of the under-represented sex hold at least 40 % of non-executive directorships;
- Members of the under-represented sex hold at least 33% of all directorships, both in and out of executive roles.
The application of the text of the Directive governing those requirements shall be suspended where certain conditions are fulfilled in the State, including that representative of the under-represented sex hold at least 30 % of non-executive directorships or at least 25 % of all directorships in listed companies.
Member States must also ensure that listed companies, which do not achieve those objectives should adapt the procedure for selecting candidates for appointment or election to directorships. Candidates are selected on the basis of a comparative assessment of qualifications. Clear, neutrally formulated and unambiguous criteria shall be applied in a non-discriminatory manner throughout the selection process, incl. during the preparation of vacancy notices, the pre-selection phase, the stage of drawing up a short list of suitable candidates and the drawing up of a reserve for the selection of candidates. The criteria shall be established in advance.
Also, each country must ensure that, at the request of a candidate whose application has been considered in the selection of candidates, he must be informed of the admission criteria on which the selection is based, as well as of the objective comparative assessment of candidates according to these criteria; where applicable, on the specific considerations which exceptionally bias the choice in favour of the candidate who is not of the under-represented sex.
The Directive provides for Member States to designate one or more bodies for the promotion, analysis, monitoring and support of gender balance in management bodies. They must also provide a system of penalties applicable to infringement by listed companies.
Member States are also obliged to provide appropriate administrative or judicial procedures aimed at protecting compliance with the obligations arising from the Directive. The penalties provided for should be effective, proportionate and dissuasive.
Reading the texts of the Directive, there is no way, on the one hand, not to say that we live in an era when human rights are elevated to a value of the highest degree. At the same time, we are aware once again that the administrative burden and complexity of the laws make it more and more difficult for business.
The best way to ensure that there will be gender equality and balance when holding management positions at management level is by applying voluntary and encouraging measures, not through sanctions! Compared to the quotas set by law, voluntary measures respect the specificities of the sector and the company. Voluntariness and incentive measures are the pragmatic and correct way to overcome the reasons preventing more women from being included in the governing bodies.
When we talk about the optimal composition of corporate boards, the goal should be the best to occupy them, and gender should be neither an obstacle nor an advantage.
