In November last year the European Parliament voted to adopt the European Commission's proposed Directive to increase the number of women on the boards of listed companies in Europe.  The new Directive will set a target of 40% female representation on non-executive board member positions in companies listed on stock exchanges, to be achieved by 2020 (2018 for public authorities).  As well as non-listed companies, small and medium enterprises (those with fewer than 250 employees and an annual worldwide turnover of not more than €50 million) would be exempt from the new Directive.

Companies will have to report annually on progress and those not meeting the target would have to take positive action by giving preference in appointments to an equally qualified woman, unless an objective assessment (taking into account all criteria specific to the individual candidates) tilts the balance in favour of a male candidate.

Listed companies will also be obliged to have a "flexi-quota" – a self-regulated target for executive representation on boards, also to be met by 2020.

Member States will need to have "appropriate and dissuasive" sanctions for breach of the Directive.  But those countries that already have an effective system in place will be able to keep it provided it is "as efficient" as the proposed Directive in achieving the 40% target.

The proposed Directive is backed up by a proposal to amend the Accounting Directive to increase disclosure of companies' diversity policies.  This would require large listed companies to include in their corporate governance statement information on their diversity policy, including gender, as well as setting out the objectives of the policy, its implementation and results achieved.  Companies that do not have a diversity policy would be obliged to explain why not.