Luxembourg is one of the countries that have not transposed the directive on gender balance on boards of directors (), also known as the Women on Boards Directive, by the deadline of 28 December 2024. The European Commission has decided to initiate infringement proceedings by sending a letter of formal notice to the countries concerned*, including Luxembourg, for failing to communicate the respective measures transposing the directive.

The commission published an on 31 January concerning the failure to meet the deadline, in which it stated that the countries had two months from that date to respond, finalise their transposition and notify the commission of their measures. In the absence of a satisfactory response, the commission may decide to issue a reasoned opinion. According to Luxembourg’s minister for gender equality and diversity, (DP), “the text is on track.” Its transposition has been entrusted to the finance ministry.

The directive sets a clear target for large listed companies in the EU, namely that “members of the underrepresented sex hold at least 40 % of non-executive director positions” or “at least 33 % of all director positions, including both executive and non-executive directors.” More specifically, only listed companies with more than 250 employees, annual sales of more than €50m or a balance sheet of more than €43m are concerned.

The text reiterates the EU’s objective in this area: “While this directive does not aim to harmonise national laws on the selection process and qualification criteria for director positions in detail, the introduction of certain minimum requirements for listed companies without balanced gender representation relating to the selection of candidates for appointment or election to director positions on the basis of a transparent and clearly defined selection process and an objective comparative assessment of their qualifications in terms of suitability, competence and professional performance is necessary for achieving gender balance. Only a binding measure at Union level can effectively help to ensure a competitive level playing field throughout the union and avoid practical complications in business life.”

What this means for the companies concerned

Companies will have to meet a number of requirements, such as disclosure of “the qualification criteria upon which the selection [of a candidate] was based.” The listed company will also have to prove that there has been no breach of the article, which states that “when choosing between candidates who are equally qualified in terms of suitability, competence and professional performance, priority is given to the candidate of the underrepresented sex.”

Another element of the directive is that listed companies will have to make individual commitments to achieve gender balance among executive directors. They will also be required to report on the composition of boards. If the objective set by the directive is not achieved, they will be required to detail the obstacles encountered and the measures taken to overcome them, as detailed in the text.

The text also provides for “penalties which are effective, proportionate and dissuasive” to be applied to companies that fail to comply with transparent selection and reporting obligations. Each member state is responsible for defining these sanctions, which “might include fines or the possibility for a judicial body to annul a decision concerning the selection of directors or to declare it null and void.”

Member states are under an obligation to publish a list of companies that have achieved the gender balance objectives. They must also “designate bodies for the promotion, analysis, monitoring and support of gender balance on boards.”

(*) The other countries that have not transposed the directive on time are Belgium, the Czech Republic, Estonia, Greece, Cyprus, Latvia, Hungary, the Netherlands, Austria and Romania.

This article was originally published in .