Overview

  • Legal duty to resolve upon target quota in order to improve representation of women
  • Among the managing directors
  • At the two top tier management levels below the managing directors
  • Among the members of the supervisory board
  • Applies to stock corporations (Aktiengesellschaften), limited liability companies (GmbHs) and others: approx. 3,500 German companies
  • Qualification: Applicability of employee representation at board level, i.e. German One-Third Participation Act (more than 500 employees) or German Workers’ Co-Determination Act (more than 2,000 employees)
  • Decisive question: Does the company have to establish a supervisory board with employee representatives?
  • Usually the case if the company has more than 500 employees
  • In case of stock corporation: listing on stock exchange already triggers duty
  • Not necessary that supervisory board has in fact already been established, cf. Sec. 52 para. 2 German Limited Liability Companies Act (GmbHG) (however, disputed)

Necessary resolutions by corporate bodies

  • Stock corporation: Supervisory board has to determine commitment on gender quota to improve representation of women among the members of the supervisory board and for the management board
  • Stock corporation: Management board has to determine commitment on gender quota for two top tier management levels below the management board
  • GmbH: Shareholders’ meeting has to determine gender quota for supervisory board and among managing directors
  • In case of co-determined GmbH (more than 2,000 employees): respective obligation for supervisory board instead of shareholders’ meeting
  • GmbH: Managing directors have to determine gender quota for two top tier management levels below the management board
  • This requires that the companies examine the status quo of women’s representation at the different hierarchy levels
  • Resolution of the respective corporate bodies required

How to define the individual quota

  • No minimum quota, i.e. companies can take into account particularities of respective company
  • Each company shall find a suitable and appropriate solution
  • But: In case current quota of women’s representation at the respective hierarchy level is below 30%, the goals must not be below the current status
  • In case the current quota of women’s representation at the respective hierarchy level is above 30%, the goals may also fall under 30% again
  • Target quota of 0% possible

Two top tier management levels below managing directors

  • Two top tier management levels below the managing directors: Companies have wide discretion how to define two management levels
  • Decisive are the actual two hierarchy levels below managing directors
  • Definition of hierarchy level: Organisational units that are equal to each other, but reporting to the common next level
  • In case only one management level below the managing directors exists, the quota has to be determined for such management level only
  • In case a holding company does not have any management levels below the managing directors, no quota have to be determined; but: this fact has to be published
  • No group-wide definition of management levels: Decisive is the respective company that has the reporting obligation

Deadlines

  • First-time determination of target quota: until 30 September 2015 at the latest
  • Self-determined deadlines to achieve target quota:
  • Companies have to set themselves deadlines by which date they want to achieve their respective target quota for women’ representation
  • The first deadline cannot be after 30 June 2017
  • Future further deadlines: Future deadlines by which the companies want to achieve their respective target quota for women’s representation can be at maximum 5 years

Reporting duties

  • Companies have to report as part of their annual reporting duties in their annual accounts (as part of the financial report, Lagebericht)
  • Also applies to small companies within the meaning of Sec. 267 German Commercial Code (HGB)
  • In case a company does not achieve its own target quota in the future, it has to report about the reasons for non-achievement (comply or explain)
  • First-time reporting obligation for financial years with accounts date after 30 September 2015: Most companies have to report for the first time for financial year 2015
  • Annual reporting obligation regarding target quota
  • But no interim reporting obligation regarding the question to which extent the target quota have already been achieved (or not)

Possible penalties

  • No penalty if respective company does not meet its own target quota in the future
  • But: Management has to report in annual accounts why targets were not met
  • In case a company does not comply with its obligation to determine target quota for women at all: Administrative penalty (Sec. 334 German Commercial Code)
  • Maximum penalty: EUR 50,000
  • Statutory auditors of company can report within auditor’s report (Prüfungsbericht) on non-compliance of the respective company with its obligation to determine target quota for women’s representation (which, however, is not being published)
  • Statutory auditors cannot limit auditor’s certificate