Equbusiness book VERSION 28SEPT2023 - Flipbook - Page 85
members. Accordingly, the minimum number for administrative and supervisory boards should be a minimum of
nine members in total. However, it is crucial to note that the French quota rule does not entail hard sanctions to
enforce a gender-diverse corporate board culture within a company.
After 2010, following the introduction of a non-binding law for gender quotas on corporate boards, French
legislators transitioned to legally binding rules in 2011. This transition, enacted without affording French
companies the opportunity for voluntary compliance with the evolving gender diversity approach, signified a
pivotal amendment in quota regulations for corporations (Raphaele François-Poncet et al., 2011; Rosenblum &
Roithmayr, 2015). Effective from January 1 2017, the new regulation mandates that both genders must be
represented in the boardroom, constituting a minimum of 40%. Similar to the Norwegian Act, this regulation
maintains a gender-neutral character, and its scope is akin.
Under the purview of the new rules, quotas are applicable to public limited companies and listed companies,
some of which, while not trading shares in regulated markets, have consistently employed an average of at least
500 people or generated a net turnover or total balance of at least 50 million euros over three consecutive
financial years. Simplified public limited companies are exempt from this scope, and the regulation does not
extend to executive boards and other committees. The stipulation to maintain a balance between genders retains
a numerical constraint, limiting the difference in the number of men and women to two.
Legislators view the quota for corporate boards as a mechanism for fostering gender equality, positioning it as a
means for facilitating women's participation in economic decision-making. In this regard, France views equality as
a precondition for economic growth (Chandler, 2016). The regulations enacted in 2010 paved the way for
significant opportunities to establish a balance between men and women on corporate boards. According to
French legislators, quotas constitute a fundamental approach to achieving gender equality, contributing not only
to diversity but also enhancing the overall quality of corporate management. In the eyes of legislators, quotas
represent a fundamental strategy for improving equality across all levels of corporate governance (Chandler,
2016).
The punitive measures associated with the amendment have limited effectiveness. Non-compliance with the
gender quota triggers the nullification of the election or selection of the affected board member, according to
French law. This mechanism is designed to prevent an unbalanced shift within the corporate sphere, compelling
corporations to consider gender quotas when appointing new board members. Maintaining the number of board
members' gender percentage above and under the legally mandated threshold renders the corporate entity in
compliance with contractual and legal constraints, potentially leading to dissolution (Chandler, 2016).
However, the effectiveness of these sanctions in fostering gender diversity within corporate boards is debatable.
Sanctions aside, decisions made by unbalanced boards do not carry consequences for third parties who have
acted in good faith. In this context, while individuals appointed to the board may not be formally recognized as
members, agreements and decisions remain legally binding for third parties in good faith. Consequently, the
decisions of a board that fails to comply with gender quotas cannot be invalidated solely on the grounds of
non-compliance. This underscores a departure from the Norwegian approach, as France does not nullify decisions
based on non-compliance with gender quotas.
Another effect of nullification is causing the attendance fee to be suspended until the mandated limits are
achieved. Also, the corporate board should address measures in ordinary general meetings and document them
in annual reports. Moreover, the chairperson of the board is obligated to communicate this situation within the
board and include it in their annual report on internal control and governance. Consequently, even in cases of
non-compliance, corporations are obliged to disclose this in their annual reports and within the board itself.
