The statutory provisions that aim to ensure the balanced participation by men and women in the management and supervision of “large” Dutch companies (i.e., the “balanced participation” rule) - introduced into Dutch legislation on January 1, 2013 - are likely to be extended until 2020. In addition, new diversity rules for large listed companies are due to be introduced.
Where seats on a managing, supervisory or one-tier board are to be divided among individuals, balanced participation is deemed to exist if at least 30% of the seats are held by men and at least 30% by women. Given the fact that these are “comply or explain” provisions, there are no legal consequences of non-compliance with such provisions. However, in the annual accounts it should be explained:
- why there is no gender balance on the board;
- how the company has tried to achieve a gender balance on the board; and
- what steps the company will take to aim for a gender balance on the board.
So far, the balanced participation rule has resulted in only a slight increase of women in the management board / executive positions, from 7.4% to 9.6% at the end of 2014. The participation of women in supervisory board / non-executive positions increased from 9.8% to 11.2% over the same period. Furthermore, it appeared that only 43% of large Dutch companies included an explanation as referred to above in their annual accounts.
The minor increase in the level of participation by women on the boards of (large) Dutch companies, and the lack of detailed explanation for such marginal change in the annual accounts, is not satisfactory to the Dutch government. For that reason, the Minister of Education, Culture and Science has announced that a new legislative proposal will be submitted to Parliament shortly in order to extend the balanced participation rule - which was originally due to end on January 1, 2016 - for another four years.
The aim is that by 2020, a minimum of 20% of top official positions shall be held by women. The Minister of Education, Culture and Science announced that, if this goal is not achieved, as an ultimate remedy, a quota with penalties - similar to the system in Norway - may need to be introduced as of 2020.
A quota for women in top positions with listed companies has also been proposed at an EU level. However, as some member states are of the opinion that this should remain a national matter, it is very unlikely that the proposed European Directive will be adopted in the near future.
New diversity rules for listed companies
Based on an existing European Directive, the rules with respect to large listed companies will go one step further than the current Dutch legislation on gender diversity. In the directors’ report for financial years beginning on or after January 1, 2017, these companies should not only report on gender diversity but also include (i) a description of the diversity policy applied at a management and supervision level with regard to aspects such as age, gender, or educational and professional backgrounds, (ii) the objectives of that diversity policy, (iii) how it has been implemented and (iv) the results of the diversity policy in the reporting period. If no such policy is applied, the statement must contain an explanation as to why this is the case.