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Women at the top

On 28 September 2021, the Dutch Senate, following the Dutch House of Representatives, approved the proposed legislation to introduce a women’s quota for companies whose shares are listed on a Dutch regulated market (“listed companies”). The proposed legislation also introduces new regulations for large private limited liability companies (in dutch: “BV’s”) and large public limited liability companies (in dutch: “NV’s”).

Introduction of the women’s quota

The women’s quota for listed companies entails that the supervisory board (in dutch: “RvC”) should be in balance. According to the legislator, a “balanced” supervisory board consists of at least 1/3 men and 1/3 women. The proposed growth quota ensures that if a supervisory is not balanced, new supervisory directors may only be appointed if this appointment would benefit said balance. In addition to the obligation for listed companies, the proposed legislation introduces an obligation for large private and public liability companies to set “appropriate” and “ambitious” targets to improve the balance between men and women in its management board and supervisory board.

But what does this entail in practice?

The obligation for listed companies is clear: when appointing new supervisory directors, the women’s quota should be complied with. A new appointment that does not promote the balance of the supervisory board is in violation of the law and therefore void. However, the invalid appointment only affects decisions taken by the supervisory board including the invalidly appointed supervisory director, once the invalidity of the appointment has been legally established.

With regard to the obligation for large private and public limited liability companies, the proposed legislation is not as clear: when can a company be considered large and what targets qualify as appropriate and ambitious? For the definition of a large company, the legislator aligned with existing legislation. A company is considered “large” when it meets, without interruption, at least two of the following requirements on two consecutive balance sheet dates: (i) the value of its assets exceeds EUR 20 million, (ii) its net turnover for the financial year exceeds EUR 40 million and (iii) the average number of its employees for the financial year exceeds 250. A target is considered “appropriate” when the target relates to the size of the management board and supervisory board and the current male/female ratio within those boards. A target is “ambitious” when it is intended to make the composition of the management board and supervisory board more balanced than the existing situation. When the management and/or supervisory board consists of more than one person but is currently without a woman, the aim therefore should be to appoint at least one woman.

Evaluation after five years

The proposed legislation shall be evaluated five years after its entry into force and will expire eight years after its entry into force. The law is therefore temporary. The aim for the legislation is to be effective on 1 January 2022.

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