Draft Quota Legislation Introduced in Germany
On October 12, the German Green Party introduced a draft bill in the Federal Parliament which aims at establishing a statutory quota for German supervisory boards (“Entwurf eines Gesetzes zur geschlechtergerechten Besetzung von Aufsichtsräten” - Draft Act on the Equitable Allocation of Board Seats) [link].
Renate Künast, the chairwomen of the Green Party’s parliamentary group, presented the draft bill to the press jointly with DJB (German Women Lawyers’ Association) and FidAR (Frauen in die Aufsichtsräte e.V.), an association devoted to the goal of enhancing the role of women on the boards of German corporations. Both associations had provided expert advice to the Green Party in the drafting process.
The proposed new provisions would apply to all German listed companies as well as all companies that are subject to employee co-determination in the supervisory board, i.e. the vast majority of companies with more than 500 employees. It introduces a statutory quota for the shareholder representatives in the supervisory boards of these companies in two steps: As of January 1, 2015 at least 30% of the positions to be filled by shareholder representatives must be taken up by women. With effect of January 1, 2017 the quota will be raised to 40%. On the employee side (depending on the size of the company, German law provides for a third or half of all supervisory board seats to be held by employee representatives), the draft bill does not set a fixed quota but provides that supervisory board seats available to employee representatives must be allocated in proportion to the representation of women and men among the company’s employees. The draft law provides for effective sanctions, i.e., the nullity of supervisory board elections when the composition of the board is not in compliance with the quota provisions and the nullity of decisions taken by a board whose composition is contrary to the quota provisions.
FidAR and the DJB support the Green Party’s new initiative. In their substance, the draft’s objectives are ambitious and comparable to the relevant Norwegian law and the pending legislation to introduce quotas in French boards. As a legal proposal, FidAR believes that the draft is legally sound and consistent with the general framework of German corporate law as well as the framework for equality-promoting legislation set by the German constitution and the Treaty on European Union. While it is unlikely, due to present political majorities, that the proposal will be enacted into law by the German Parliament at any time soon, we expect it to invigorate the debate in Germany and to enhance public awareness of the dramatic lack of women in top decision making positions in German companies as well as of the urgency to change this situation.
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Jutta von Falkenhausen, MPA (Harvard), practices law in Germany. She is a member of DJB and EWLA as well as a founding member and vice-president of FidAR e.V., the German association promoting more women on corporate boards (www.fidar.de).
TEXT OF THE DRAFT LAW