The European Commission has announced the outcome of its latest discussions on legislative proposals to increase the number of women on the boards of listed companies in Europe.  A 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 EUR) would be exempt from the new Directive. 

Companies which do not meet the target will 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. 

Companies will have to report annually on progress. 

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 UK Government, welcoming the Commission's decision not to impose mandatory quotas, favours a self-regulatory national level approach, but despite initiatives in this area flowing from the Davies review of boardroom gender balance, there may be some way to go to match the European proposals, given that the latest figures from the Commission show the UK with 18.7% female non-executives (3.7% above the European average).