Netherlands passes law for more gender equality in leadership positions

Out-Law News | 18 Oct 2021 | 9:47 am | 1 min. read

A new law will provide for a more balanced ratio between men and women in leadership positions at large businesses in the Netherlands.

The Dutch senate has recently approved a bill for a more balanced ratio between men and women in the board of directors and supervisory board. The bill is based on advice from the Social and Economic Council (Sociaal-Economische Raad/SER) and likely to come into force on 1 January next year.

Emile Doelwijt, corporate law expert at Pinsent Masons, the law firm behind Out-Law, said: "From a recently published quick scan by the SER, it appears that despite the fact that, according to the survey, 8 out of 10 businesses are aware that the law for more women at the top is coming, less than 20% of the relevant businesses have actually started with preparations to comply with the new legislation."

The new regulation replaces an earlier ordinance that was based on the 'comply or explain' principle and applied from 2013 to 2020, but according to experts did not lead to the desired success. The new regulation is considered to be more binding in character.

The bill applies to public and private businesses that qualify as 'large' businesses. The criteria for large businesses are a total value of assets of more than €20 million, a net turnover of more than €40m and at least 250 employees. If a company meets two or more of these criteria on two consecutive balance sheet dates, it is considered a large company. The number of Dutch businesses that qualify as large businesses under these criteria is estimated at 5,000.

Large businesses will be required to set a target to achieve a more balanced ratio of men and women on the supervisory board, board of directors and second-tier management. If the supervisory board and the board of directors each consist of only one person, a target can be set for both bodies together.

The targets must be commensurate with the size of the supervisory board, the board of directors and the second-tier management and aim for a more balanced gender distribution. If there is not a single person of the other sex in the board, the aim should be to appoint at least one. Businesses must report annually on their targets and progress.

For the approximately 100 Dutch businesses whose shares are listed, a special rule applies: as long as the composition of the supervisory board of a business does not consist of at least one third men and at least one third women, a person whose appointment would make the ratio between men and women on the supervisory board more unbalanced cannot be appointed as a supervisory board member, unless this concerns a reappointment.