Irish Region

On 22 November 2022, the European Parliament formally adopted a new EU law on the composition of corporate boards following ten years of discussions between the European Parliament and the European Council. The Directive provides that the board of Directors of large EU Listed companies must be compromised of 33% of members of the under-represented gender at the minimum for all director positions (or 40% of Non-Executive Director positions).

Furthermore there is a requirement on these companies to report annually on the composition of their boards and where this criteria has not been met, the Company must detail the measures that will be taken to ensure these objectives are met in the future.

It is worth noting that this requirement does not apply to small and medium – sized companies with less than 250 employees and annual turnover not exceeding EUR50 million or an annual balance sheet not exceeding EUR 43 million.

Once the Directive has been published in the Official Journal, it will enter into force twenty days after that date.

Member States are under obligation to adopt these requirements into national law within two years from the date of the adoption of the Directive.

Member states will have to ensure that Companies strive to meet this requirement by 30 June 2026.

Interestingly, Ireland has already commenced the process to incorporate these requirements into national law, and in fact goes further, the Irish Corporate Governance (Gender Balance) Bill 2021 applies to all corporate bodies in Ireland.

The compliance reporting on the annual reports or other financial statements of the composition of boards in Ireland will operate on a comply or explain basis, where the criteria have not been satisfied and the corporate body is not compliant with the gender balance requirement, an application for a High Court Order directing compliance with these requirements may be made by the relevant authority.

The Bill also puts forward some exemptions to this requirement, including;

• Single director companies
• Companies with less than €750,000 in turnover
• Companies with less than 20 employees
• Unincorporated associations
• Partnerships

The Bill will most likely lead to further debate around the benefit of gender quotas and it remains to be seen how effective it will be, especially in a country where many companies are family-owned and managed.

The Bill is currently at the third stage of approval by Dáil Éireann.

Nathan Grimley

Company Secretary, Arthur Cox