Germany introduces women’s quota and option to take time-out in management bodies of large companies
On June 11, 2021, the German Parliament [Bundestag] approved by a majority the German government’s bill “to supplement and amend the regulations for the equal participation of women in management positions in the private and public sectors” (BT-Drs. 19/26689, BT-Drs. 19/27633, BT-Drs. 19/28005 No. 6) as amended by the Family Committee (BT-Drs. 19/30514).
The background to this was that in the private sector the fixed supervisory board quota introduced in 2016 has led to a significant increase in the average proportion of women on supervisory boards. Here, the 30 percent threshold was already exceeded in the fiscal year 2017 and stood at 35.2 percent in November 2020. However, the proportion of women on management boards, for which there was previously no minimum threshold, had developed less positively compared to the supervisory boards (there is a two-tier system in place for supervisory and management boards in Germany).
According to the German government’s draft legislation, in the future listed companies and companies with equal codetermination with more than 2,000 employees must have at least one woman and one man on their board of directors and other management bodies with more than three members. According to government figures, this affects around 70 companies, 30 of which currently have no women on their boards. According to the bill, all other companies will in the future have to justify why they are not aiming to appoint a woman to the board. Companies that do not specify a target for the proportion of women or do not provide a reason are to be sanctioned.
Companies with fewer than 2,000 employees, i.e. in particular in the area of one-third co-determination, are not covered by the new regulation.
A special rule applies to companies in which the federal government holds a majority stake: Here, a fixed quota of women or men of at least 30 percent is set for supervisory boards. In addition, at least one woman is to be represented on boards with more than two members. In public corporations such as health insurance funds, pension and accident insurance institutions and the Federal Employment Agency, a minimum of one woman will also be required to sit on boards with more than one member. In addition, under the amended Federal Appointments Act, in the future boards with as few as two members will fall under its provisions.
Also new is a provision on the “time-out” of executive bodies. The appointment of a member of the management body of an stock corporation [Aktiengesellschaft], SE or limited liability company [Gesellschaft mit beschränkter Haftung] may be suspended temporarily for reasons of
Legally, this is the termination of the appointment by revocation, combined with the right to a reappointment after expiry of the relevant period. The right and possibility to revoke the appointment is intended to ensure that the management board member is fully relieved of all duties and liability risks during the “time-out.”
Previously, in such cases a member of a management body either had to continue to manage the business during the time out – with liability responsibility! – or resign from office without having any secure entitlement to reappointment.
Questions?
If you have any questions, please contact Dr. Oliver Wulff , who specializes in comprehensive support for medium-sized companies.
Tel.: +49 (89) 290719-18
E-Mail: o.wulff@rae-weiss.de