Still on the Road to Gender Equality in 2021: the Netherlands adopts law on gender diversity on management boardsNews
Today, 28 September 2021, the Netherlands has adopted a law on a more balanced ratio of seats between men and women on executive and supervisory boards. The regulation is a response to the clear indication that diversity on executive and supervisory boards has been lagging behind for years. The law will likely go in effect on January 1, 2022. The adoption of this regulation was prompted by a report by the Dutch SER (‘Sociaal-Economische Raad’).
The new law sets out two separate mechanisms to promote gender diversity at management boards. First, a growth quota will be used to ascertain that within the supervisory board of a listed company, at least a third of the board members must be women, and a third must be men. This growth quota will apply to new appointments of supervisory directors. Second, large public and private limited companies in the Netherlands are required to set appropriate and ambitious targets to ensure a more balanced ratio between men and women in the (sub)top layer of the company. There is an annual reporting requirement for the companies to disclose their progress.
Which companies are covered by the regulation?
The first mechanism of the regulation, the growth quota, will apply to all Dutch listed companies whose shares or depository receipts are listed on Euronext Amsterdam, regardless of their size.
The obligation to draw up appropriate and ambitious targets for a more balanced ratio, the second mechanism, applies to all public and private limited companies that are considered to be ‘large’. In order to be considered as such, the company will have to meet at least two out of the following three criteria on two consecutive balance sheet dates:
- The value of the assets exceeds €20 million;
- The net turnover of the company exceeds €40 million;
- The company has 250 employees or more (on average).
Some companies may be subject to both mechanisms.
How can we help?
We are happy to answer any questions you may have regarding this newly adopted regulation. If you are unsure how to proceed or need assistance setting up clear and unambiguous targets and standards, we will be able to help.
Contact us for more details.