German parliament has approved a compulsory gender quota in supervisory boards of at least 30% for certain types of corporations. The quota will come into effect in January 2016.

Germany will introduce a nationwide, sector-independent, indispensable gender quota of at least 30% in supervisory boards for certain corporations. The quota applies for all corporations that (i.) are listed on the stock exchange and (ii.) employ more than 2,000 employees and are thus subject to codetermination on a basis of parity. Corporations that are subject to codetermination on a basis of parity must have a supervisory board composed equally of representatives of the stakeholders and employee representatives. The quota applies to the gender that is underrepresented in the supervisory board.

The quota applies as of January 1, 2016. However, it is only relevant where a supervisory board is elected for the first time or re-elected. An existing supervisory board does not need to be changed.

If a supervisory board does not meet the quota, the election is in as far invalid, as the seats required to fulfill the quota must remain empty. Those seats must be staffed with a person of the underrepresented gender in a special election. There might be a risk that resolution of the supervisory board before the special election may not be valid, if the votes corresponding to the empty seats were decisive for the resolution. Corporations must also declare in their annual reports whether the quota is fulfilled, and give reasons in case it is not fulfilled.

In addition, corporations must introduce goals for gender quotas for their board of directors, as well as first and second management levels. While the law does not prescribe a certain quota in this regard, the goal may not be less than the status quo, if the quota is currently less than 30% on the respective level. Goals must be set by September 30, 2015, and are to be achieved no later than June 30, 2017. Corporations must publically announce these goals, as well as the level of achievement. There are no further consequences if the self-imposed quotas are not achieved.

The aforementioned requirement also applies, to some extent, for corporations that

  • are listed on the stock exchange, but employ not more than 2,000 employees; or
  • employ more than 500, but not more than 2,000 employees.

These corporations must set goals for the aforementioned gender quotas not only for their board of directors and first and second management levels, but also for their board of directors, as a fixed gender quota is not required for those corporations in this regard.