Female representation at the corporate top (IVOR nr. 126) 2022/3.2.3:3.2.3 Quota legislation

Female representation at the corporate top (IVOR nr. 126) 2022/3.2.3

3.2.3 Quota legislation

Documentgegevens:

dr. mr. R.A. van ’t Foort-Diepeveen, datum 13-05-2022

Datum: 13-05-2022
Auteur: dr. mr. R.A. van ’t Foort-Diepeveen
JCDI: JCDI:ADS659160:1
Vakgebied(en): Ondernemingsrecht (V)
Ondernemingsrecht / Corporate governance

In September 2011, the law introducing a gender quota entered into force.1 The quota applies to listed companies,2 state-owned companies and the National Lottery. The quota legislation requires of these companies that at least one-third of their management board is comprised of women (and at least one-third of men).3 More specifically, the law states that ‘at least one-third of the members of the management board is of a different gender than the other members’.4 The management board (raad van bestuur) is used as a term in the legislation to indicate the board that is composed of both executive board members and non-executive board members, given that Belgium traditionally applies the one-tier board model for companies.5 However, since 2020, the Belgian Code on Companies and Associations (BCCA) (Wetboek van vennootschappen en verenigingen) (WVV) also provides for the possibility of adopting a two-tier board, with a separate supervisory board (raad van toezicht), and a management board (which is called directieraad in the two-tier board structure).6 When a company has a two-tier board, the quota only applies to the supervisory board (raad van toezicht).7 However, the one-tier board is the dominant board model and the two-tier board is adopted by only a few companies.8 For convenience sake, the term board will be used to refer to both the management board, when the company has a one-tier board, and to the supervisory board, when the company has a two-tier board, when discussing the Belgian quota. Since the one-tier board is still the prevailing board model in Belgium, the remainder of this chapter will only discuss the provisions for the one-tier board. The BCCA furthermore provides for the possibility of establishing an executive committee (directiecomité),9 but the gender quota does not apply to the executive committee.10 The implementation deadline ranged from 2017 for large, listed companies to 2019 for small11 listed companies.12

When calculating the minimum number of female board members required, the number has to be rounded off to the nearest whole number.13 The law requires of public limited liability companies (naamloze vennootschappen) that they have at least three board members. Two board members are allowed if the company has less than three shareholders.14 This means that at least one female board member should be appointed.

The general meeting is responsible for ensuring that the company complies with the quota. In the event the company does not meet the quota, the general meeting needs to appoint a board during the next general meeting that is constituted in accordance with the quota requirement.15 If the general meeting fails to fulfil this obligation two sanctions apply.16 The first sanction is that the appointment of a board member, which appointment does not contribute to meeting or maintaining the quota, is void.17 This voidness of the appointment under Belgium law requires that a claim for voidness of the appointment is submitted to the commercial court by an interested party.18 This claim has to be filed within six months: (1) from the day the appointment can be invoked against the party who claims that the appointment is void; or (2) from the day the appointment is brought to that party’s notice.19 The voidness of the appointment does not affect the validity of decisions that were taken by the board involving the appointed director; that is to say, the appointed director who does not contribute to the meeting of the quota.20 The second sanction is that the financial and non-financial benefits of the management board members that are connected to their board mandate will be suspended until the management board complies with the quota requirement.21 The financial and non-financial benefits include, for instance, remuneration, bonuses and share options.22 In summary, it is foremost the responsibility of the general meeting to ensure that the quota requirement is met, and if it fails to do so a sanction will be imposed upon individual board members. This illustrates that non-compliance with quota legislation has consequences for board members at an individual level.23 The quota legislation furthermore requires of companies that they disclose a description of the board’s composition and of their efforts to meet the quota in their corporate governance statement.24 If the company does not disclose such information, individual board members run the risk of being fined up to € 10,000 each.25

Toon alle voetnoten

Voetnoten

Voetnoten

The Law of 28 July 2011 regarding female representation on boards (the law of 28 July 2011), which was published in Belgisch Staatsblad 14 September 2011, 59.600. See also Senden, Utrecht Law Review, 2014, 10(5), p. 57; Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1027; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 160 and 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 483.

Listed companies are companies that trade their shares or other securities on a regulated market. Listed companies do not only include public limited liability companies but also other companies that have their shares or securities listed on a regulated market, such as the partnership limited by shares (commanditaire vennootschap op aandelen) or European companies (SE). See Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1032; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 486 and 525.

M. Teigen, ‘Gender quotas on corporate boards: On the diffusion of a distinct national policy reform’, in: F. Engelstad & M. Teigen (Eds.) Firms, boards and gender quotas: Comparative perspectives (Comparative Social Research, Vol. 29), UK: Emerald Group Publishing Limited 2012, p. 115-146, p. 129; Senden, Utrecht Law Review, 2014, 10(5), p. 57; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 483; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

Author’s own translation. Art. 4 of the law of 28 July 2011 introduced a new art. 518bis to the Belgian Company Code (Wetboek van vennootschappen) (old). The Belgian Company Code has undergone a major revision with the introduction of the Belgian Code on Companies and Associations (BCCA) (Wetboek van vennootschappen en verenigingen, Belgisch Staatsblad 4 April 2019, 33239) (WVV), which changed the structure of the Belgian Company Code. See also Loosen & van Campe, Tijdschrift Vermogen, 2019, 6. Art. 518bis was replaced by art. 7:86 BCCA.

Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 160; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 486 and 526; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 175; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 161.

Art. 7:104 BCCA. Loosen & van Campe, Tijdschrift Vermogen, 2019, 6, p. 18 and 22.

Art. 7:106 BCCA.

E. Janssens & D. van Gerven, ‘Chapter 3: Belgium’, in: W.J.L. Calkoen (Ed.), The Corporate Governance Review, London: Law Business Research Ltd 2021, p. 33-54, p. 35.

Already in the Company Code (Wetboek van vennootschappen) (old) it was possible to establish an executive committee. However, since the adoption of the BCCA the establishment of an executive committee does no longer have a legal basis. See Loosen & van Campe, Tijdschrift Vermogen, 2019, 6, p. 18.

10.

Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 486; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 175; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 161.

11.

Small listed companies are companies whereby (1) the value of the freely marketable shares is less than 50 percent of the total share value or (2) companies that comply with two of the following criteria: (a) on average less than 250 employees, (b) a balance sheet total of less than or equal to 43 million euro, and (c) a yearly net-turnover less than or equal to 50 million euro (art. 7 (2) and (3) of the law of 28 July 2011). See also Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1037; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 484.

12.

Art. 7 (2) and (3) of the law of 28 July 2011. See also Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1036-1037; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 484.

13.

Art. 7:86, 7:105 and 7:107 BCCA. See also Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1035; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 486.

14.

Art. 7:85 (1) BCCA. See also Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 486.

15.

Art. 7:86 BCCA. See also Senden, Utrecht Law Review, 2014, 10(5), p. 57; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 489; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 177; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435-436; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

16.

Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435-436.

17.

Art. 7:86 BCCA. See also Lambooy, European Company Law, 2012, 9(2), p. 58; Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1036; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 487; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 177; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

18.

Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1037; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 488; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

19.

Art. 7:86 BCCA. See also Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1037; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 488; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

20.

Art. 7:86 BCCA. See also Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1038; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 488; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 437.

21.

Art. 7:86 BCCA. See also Lambooy, European Company Law, 2012, 9(2), p. 58; Senden, Utrecht Law Review, 2014, 10(5), p. 57; Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1036, 1039 en 1040; Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 489; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 177; Wyckaert, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 435-436; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

22.

Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1036, 1039 and 1040.

23.

Coen & Wyckaert, Tijdschrift voor Rechtspersoon en Vennootschap, 2016, p. 1037; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 489.

24.

Art. 3:6 (2),(5) and (6) BCCA. See also Levrau, in: Gender diversity in the Boardroom: Volume 1: The Use of Different Quota Regulations, 2017, p. 164; Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 490; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 178; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 160.

25.

Art. 3:45 BCCA. Boschma et al., Evaluatie Wet bestuur en toezicht, 2018a, p. 490; Lennarts, in: Diversiteit. Een multidisciplinaire terreinverkenning, 2020, p. 178; van de Klashorst & Pijls, Ondernemingsrecht, 2020, 2020/31(4), p. 161.