Luxembourg is that aims to achieve a more balanced gender representation on the boards of listed companies. Member states had until 28 December 2024 to transpose it, and Luxembourg has not yet done so. But the government is making progress. The bill was approved by the cabinet and tabled in the Chamber of Deputies on 28 March by finance minister (CSV). It must now follow the usual legislative process in parliament.
First, the directive aims to ensure the application of the principle of equal opportunities between the two sexes and achieve a more balanced representation, by defining a set of procedural requirements concerning the selection of candidates, based on transparency and merit. More specifically, it covers companies whose shares are admitted to trading on a regulated market in one or more member states and which have their registered office in Luxembourg.
Member states were offered two choices in terms of the targets to be set: members of the under-represented gender must occupy at least 40% of non-executive positions, or they must occupy at least 33% of all board positions combined by 30 June 2026.
Luxembourg has opted for the second option. “In order to promote a more balanced representation of women and men on boards, it is important that listed companies increase the proportion of members of the under-represented sex in all decision-making positions, and not just in non-executive directorships,” states the explanatory memorandum to the bill.
Only large listed companies in the real economy are concerned, considering that they are of particular economic importance and enjoy high visibility. This, according to the explanatory memorandum detailed in the bill, “makes the adoption of measures at the level of these companies particularly effective.” Listed SMEs, on the other hand, are not affected.
The CSSF is watching
To help apply this new directive, the Financial Sector Supervisory Commission (CSSF) has been designated as the competent authority. Listed companies will be required to provide information on the composition of boards to the CSSF. The financial regulator will thus be responsible for analysing and monitoring the gender balance on boards, in addition to its task of analysing financial and non-financial information. Every two years, the CSSF will have to provide the government with a report on the application of the law. The first report is due on 1 December.
The companies concerned will have to provide information on the composition of their boards once a year, as well as describe the measures taken to achieve the target.
Playing more of a promotional and support role, the Observatory for Gender Equality and the Higher Council for Gender Equality will be tasked with promoting gender balance in accordance with the draft law.
The political authorities are even hoping that the directive will produce effects beyond listed companies by attracting female skills to companies. “It could also have an indirect effect, or ‘spillover effect,’ by encouraging a greater presence of women at all levels of management and amongst the workforce, which could have a positive impact on the employment and pay gaps between women and men.”
Sanctions?
As tabled, the bill provides for sanctions and additional measures in the event of non-compliance with the rules. The CSSF will be able to take administrative measures and impose sanctions such as a warning, a reprimand, a public statement specifying the identity of the listed company and the nature of the breach, an injunction ordering the company to comply with the law, or a fine of between €250 and €250,000. It may also impose a penalty payment of between €1,250 and €25,000 per day.
This article was originally published in .