Equbusiness book VERSION 28SEPT2023 - Flipbook - Page 86
7.4.1.3. GERMANY
The narrative of women's representation on corporate boards in Germany unfolds over an extensive timeframe.
In 2001, the German government collaboratively engaged with crucial business associations to promote women
and equality in company boards and decision-making processes (Winters & Jacobs-Sharma, 2016; Burrow et al.,
2018). In response, the German legislature enacted a non-binding rule stipulating that corporations should
conscientiously consider diversity during the recruitment of managerial positions, with a specific emphasis on
appropriateness for women. However, this legislation lacked explicit sanctions to deter non-compliance and
offered no detailed guidance on what constituted appropriate measures. Despite this, the 'comply or explain'
approach catalyzed a significant increase in women's representation, elevating it from 11% to 22% within two
years of the law's enactment (Winters & Jacobs-Sharma, 2016). But it did not stop women from being
underrepresented on both management and supervisory boards (Kirsh, 2017)
In light of the need for enhanced gender equality, a subsequent amendment was introduced in 2015, mandating
a 30% quota for both women and men in supervisory boards for listed companies (AktG 96/2). This quota extends
to both shareholder and employee representatives, and its minimum limit is calculated collectively. However,
shareholders or employee representatives have the option to object to the overall fulfillment of the quota before
elections, enabling separate calculations. Appointments that do not align with the quota are deemed void from
the outset. Although the rule does not explicitly address the applicability of these provisions to substitute
members, it is implied that such considerations extend to substitutes. Consequently, both the executive board
and the chairman bear the responsibility to assert the invalidity of appointments not conforming to the
mandated gender quota (Mense & Klie, 2015).
In the continuous effort to enhance gender diversity, German legislators revised the quota legislation in June
2021, introducing additional rules to fortify existing measures. As per the amendment, listed companies with
more than 2000 employees are now mandated to have at least one man and one woman on their executive
board when the board comprises more than three members. In instances where the executive board consists of
three or fewer members, the rule is exclusively applicable to the subsequent regular appointment. The election
of a member who fails to comply with this rule is deemed void under the provisions of AktG 76/3a.
Beyond the reconfiguration of the executive board, German legislators also directed their focus towards
restructuring the boards under the executive board. Pursuant to AktG 76/4, the executive board of listed or
co-determined companies is required to establish a target for the proportion of women on boards under the
executive board. Notably, if the executive board sets the target number as zero for at least one of the sub boards,
a comprehensive and clear rationale must be provided, adhering to the 'comply or explain' principle. This
necessitates a detailed explanation, as merely setting a target of zero without accompanying justifications is
deemed inapplicable. Moreover, if the decided proportion is below 30%, it cannot fall below the proportion
already achieved by the company. For instance, a company with a 20% proportion cannot target a new proportion
lower than 15%. Consequently, the target should consistently exceed the achieved proportion. In addition to
establishing a proportion target, the executive board is obligated to determine a deadline for achieving this
target, with the specified period not exceeding five years.
7.4.1.4. SPAIN
As one of the European Union countries, Spain embarked on using gender quotas in 2007. Spanish legislators
proposed that private and/or listed companies should have a minimum representation of women on their boards
at 40% by 2015. Despite the ambitious quota set by legislators, the rule lacked any explicit sanction for
non-compliance which shows that legislation only acts as a recommendation (Prunty, 2021). Instead, legislators
opted for positive recognition and rewards for companies that achieved the anticipated results. That is one of the
first examples of rewarding corporations for creating a gender-diverse corporate board. In practice, the quota,
