EU Directive on improving the gender balance among directors of listed companies

The “Women on Boards” Directive

A decade following the proposal of the European Commission on gender balance on company boards, the EU is actively breaking the glass ceiling following the implementation of new gender balance targets on corporate boardrooms.

On the 23rd of November 2022, the EU adopted the Directive (EU) 2022/2381 of the European Parliament and the Council on improving the gender balance among directors of listed companies. The Directive sets targets of 40% of the underrepresented sex among non-executive directors or 33% among all board members of listed companies by June 30, 2026. EU Member States are required to turn the Directive into national law and establish national rules implementing its measures until 2024.

To ensure compliance, the Directive also directs listed entities to provide competent authorities with information about gender representation on their boards annually, as well as, reports that would identify the reasons of unachievable targets and how they plan to meet the objectives. Furter, Member States are expected to establish policies for effective, proportionate and dissuasive penalties for non – compliance with the national requirements.

Despite the quotas of 40% and 33% which promote the priority to be given to the underrepresented sex during the candidate selection procedure for board positions, the Directive emphasises that this priority should not “constitute an automatic and unconditional preference”, promoting in this manner the need for transparency and that “candidates [should] be assessed objectively on their individual merits, regardless of their gender”, protecting candidates against positive discrimination.

The aims of the Directive:

1.  Promote gender equality on corporate boards of listed EU companies established across EU Member States;

2.  Ensure transparency of boardroom appointments

It is worth noting that the Directive is solely applicable to listed entities. Although it exempts from its application Small Medium Enterprises (SME’s) i.e., companies that have less than 250 employees and their annual turnover does not exceed EUR 50 million, it can be viewed as a landmark decision which could “oil the wheels” for a wider application of its notion.


As commented by President Von der Leyen, the adoption of legally binding measures “is a long-awaited moment, a moment to be celebrated as a breakthrough in gender equality.” Although measures such as gender quotas have resulted to controversies, they appear to be effective considering that in EU countries where binding quotas were introduced, considerably more women were appointed. In focus to the Cypriot landscape, women in power have been gaining momentum in the recent years in various fields including politics. The time has come for the underrepresented sex to participate and gain top positions in the corporate ladder.

Undeniably, the measures and proposed targets as per the Directive can be regarded as one of the many, and not the only way, to address gender imbalance on corporate boards. However, it is a solid step towards increasing gender diversity on boards. Now, it is yet to be determined how the Member States will incorporate the provisions of the Directive and what incentives will be given to women to climb corporate ladders without having to sacrifice family and other commitments. 



Mariza Apostolou
Associate Lawyer – Legal Department



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