14 January 2022
On January 1, 2022, the legislative proposal on balanced gender diversity at the top of large companies (the “Act“, in Dutch: Wetsvoorstel inzake evenwichtige man/vrouwverhouding in de top van het bedrijfsleven), came into effect.
Diversity quota for listed companies
As set out in our previous blogs (links below), the Act introduced a diversity quota (the “Diversity Quota“) of at least one-third for both women and men for supervisory boards of Dutch entities listed at Euronext Amsterdam (irrespective of whether they are a two-tier board company and/or subject to the so called “large company regime”). The Diversity Quota is only applicable to new appointments. There is no obligation to change current board compositions to meet the Diversity Quota.
The Diversity Quota furthermore does not apply to the reappointment of a supervisory board member (within eight years after its first appointment). This means that a current supervisory board member may be reappointed without taking the Diversity Quota into account. Such person may be re-appointed once for a term of four years, followed by a reappointed for a term of two years, which term may be extended once more for a maximum of two years (this in conformity with the best practice provision 2.2.2 of the Corporate Governance Code). After these three terms, a new supervisory board member should be appointed who does contribute to the male/female ratio, except when the supervisory board only consists of one person, in which case it is not possible to determine a Diversity Quota.
Calculation example of equal division supervisory board
|
Number of supervisory board members |
Diversity Quota |
|
1 |
No Diversity Quota can be set |
|
2 or 3 |
At least 1 female and 1 male |
|
4, 5 or 6 |
At least 2 females and 2 males |
|
7, 8 or 9 |
At least 3 females and 3 males |
Non-compliance
If a listed NV or BV does not meet the Diversity Quota and chooses to appoint a supervisory board member of the overrepresented gender, such appointment will be null and void. The same applies to the appointment of non-executive directors in case of a one-tier board model. In order to avoid legal uncertainty this will, however, not impact the legal validity of the board decisions taken. Such decisions are legally valid until the nullity of the appointment has been established in court to stand.
Target Figure and Target Plan for large NVs and BVs
As set out in our previous blogs, the Act additionally introduced the obligation for large NVs and BVs to set an appropriate and ambitious self-determined target figure (the “Target Figure“) and to prepare a plan of action (the “Target Plan“) in order to promote gender diversity on the management board, supervisory board and within senior management.
For Dutch listed companies, the abovementioned Target Figure only applies to the management board and senior management, as the Diversity Quota already applies to the supervisory board of listed companies.
Appropriate and ambitious self-determined Target Figure
An appropriate and ambitious Target Figure depends on (i) the size of the management board, supervisory board and senior management and (ii) the existing balance between men and women in the company.
If there is a corporate body, consisting of only one member, a Target Figure cannot be set. In case the management board and supervisory board both consist of one person, the Target Figure could be set jointly for both corporate bodies. A calculation example is set out below.
Calculation Target Figure
|
Number of management board members |
Number of supervisory board members |
Target Figure |
|
1 |
0 |
No Target Figure can be set. |
|
1 |
1 |
Joint Target Figure: 1 female and 1 male. |
|
1 |
2 |
Management Board: no Target Figure can be set. Supervisory Board: aim for 1 female and 1 male. |
|
2 |
1 |
Management Board: aim for 1 female and 1 male. Supervisory Board: no Target Figure can be set. |
|
2 |
2 |
Management Board: aim for 1 female and 1 male. Supervisory Board: aim for 1 female and 1 male. |
|
2 |
3 |
Management Board: aim for 1 female and 1 male. Supervisory Board: aim for at least 1 female and 1 male. |
Focus point large companies
The abovementioned reporting requirements apply to the financial year starting on or after January 1, 2022. Effectively this means that large companies will have to monitor their progress during the new financial year and will account for this in their directors’ report to the annual accounts of such financial year. The companies must also report their progress to the Social and Economic Council (SER).
For more detailed information with regard to the Act, we refer to our previous blogs on this topic:
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