Today, only two out of ten board members in private companies are women. The issue of gender representation in the boards of joint-stock companies has been a topic of discussion. Currently, the percentage of female board representatives stands at 20%, which the Norwegian government considers to be too low. Therefore, the government has proposed introducing a requirement for gender balance in the boards of Norwegian joint-stock companies. The proposal is based on a gender balance, where both genders should be represented with at least 40%.
Voluntary certification scheme
Regarding the requirement for gender representation, it is considered being directly implemented as law, along with the introduction of a voluntary certification scheme for diversity management. According to the government's consultation proposal dated December 12, 2022, the "certification scheme can become a tool for individual companies while providing contracting parties and investors with a basis for choosing partners based on the company's efforts towards gender equality and diversity." (office translation).
Calculation point for the gender requirement
The proposal states that the calculation point for the gender requirement should be set at the balance sheet date for the annual financial statements. This means that the current board will be valid until the regular Shareholder Meeting or annual meeting is held. If the proposal is approved this year, companies may already have to present proposals for board composition that comply with the gender requirements during their regular Shareholder’s Meeting in 2023.
Consequences of not meeting the gender requirement
Failing to meet the gender requirement could ultimately lead to the company being forcibly dissolved by the court under the Companies Act § 16-15.
Who is affected by the proposal?
The proposal will not affect the smallest companies. The requirement is proposed to apply to companies with more than 30 full-time equivalent employees and 70 million NOK in turnover. Based on this threshold, it would mean that approximately 17,000 Norwegian companies would be affected by the current proposal, but the criteria for delimitation are under consideration.
Challenges with the proposal
The issue of legal gender is no longer black and white, or strictly male and female, as a third possible gender category "hen" is gaining ground in Norwegian society. This poses a challenge to the proposal. How the gender category "hen" is affected by the proposal is uncertain. However, it seems that the legislative trend is moving away from gender-neutral legislation, as the development of society does not naturally increase the level of gender equality quickly enough on its own.