The European Union Gender Balance on Corporate Boards Directive (the “Directive”) represents one of the most significant regulatory attempts to address gender inequality in corporate management. It aims to increase the representation of women at the highest levels of corporate decision-making across EU Member States. After two years for Member States to implement it, the Directive is now entering into force.

The need for women’s representation at the top levels of the companies concerned stems from the apparent disparity between the number of women graduating from universities in the EU and the number of women who are members of management and supervisory bodies. According to research by the European Institute for Gender Equality, around 60% of new graduates from universities in the EU are women. At the same time, women account for only 31.5% of all members of management and supervisory bodies in top positions, and only 8% of chairpersons of these bodies are women.

What is its content, who will it affect

The Directive, formally adopted in 2022, requires that at least 40% of supervisory board members and non-executive director positions or at least 33% of all members of a company’s governing body consist of persons of the underrepresented gender. The obligation will only affect listed companies, i.e. those with registered office in an EU Member State and whose shares are admitted for trading on a regulated market in one or more Member States. In addition, listed companies employing fewer than 250 persons and having an annual turnover of less than EUR 50 million or an annual balance sheet total of less than EUR 43 million will not be affected.

These companies will have to adopt fair and transparent procedures for the election and appointment of members of the relevant bodies, based on a comparative assessment of individual candidates on the basis of clear and neutrally formulated criteria. Qualifications and merit will continue to be key criteria. However, preference will be given to equally qualified candidates of the under-represented gender, unless an objective assessment decides in favour of a candidate of the opposite gender

The Directive includes transparency requirements that oblige companies to report annually on the gender composition of their bodies and the measures taken to achieve the required objectives. Companies that do not meet the targets must explain why and describe the steps they are taking to address the imbalance.

In order for the Directive to be effective in the Czech Republic, it will require the adoption of a law implementing the Directive. And although the deadline for the adoption of this law – or rather an amendment – has already expired, the amendment is still awaiting approval by the Chamber of Deputies. Companies should comply with the requirements of the Directive by mid-2026.

Conclusion

The authors of the Directive expect it to significantly increase representation of women on corporate boards across the EU. The studies referred to by the EU institutions show that more diverse boards can lead to better decision-making, more innovation and better financial performance.

While some questions about implementation remain unanswered, it is clear that the Directive has the potential to fundamentally change the dynamics of gender equality in European businesses and provide a model for similar efforts around the world.