Gender Diversity in the boards of
listed and public companies

On 14 September 2011 the law in order to ensure the presence of women in the board of directors of the autonomous public enterprises, listed companies and the National Lottery was published in the Belgian Official Gazette.

It concerns the law of 28 July 2011 amending the law of 21 March 1991 regarding the reformation of certain public companies, the Belgian Code of Companies and the law of 19 April 2002 to rationalize the operation and management of the National Lottery.

This law makes it mandatory for listed companies to have, after a transitional period, at least one third of the members of their board of directors of the opposite sex than the other directors. This legislative initiative came as a result of the finding that women are still underrepresented in the business world, especially at the top of our corporations. Women are well represented in the middle management and lower, but knock into the "glass ceiling", an invisible barrier rooted in organizational factors, attitudes and prejudices, to further push into the highest echelons of the Belgian business world.

There is a general consensus regarding the need for gender diversity at the top of our companies. However, there is more controversy with regard to the idea of using an imposed quota as an adequate or even as a legal mean to this end. The Belgian Corporate Governance Code 2009 already stated that the composition of the board of directors is determined on the basis of gender diversity and diversity in general, and also on the basis of complementarity regarding skills, experience and knowledge (principle 2.1). Since the entry into force of the Royal Decree of 6 June 2010, listed companies may only refer to the Belgian Corporate Governance Code of 2009 in their annual reports as the code being used. However, this statutory basis does not guarantee that the boards of directors will be composed in compliance with gender diversity. In implementation of the principle "comply or explain", the companies may mention in their annual reports that they do not apply some parts of the Belgian Corporate Governance Code 2009 listing the substantial reasons (Article 95 § 2, 2 ° of the Belgian Companies Code.). This escape route was initially intended for listed companies starting up, but in reality it is often used by large companies. The law of 28 July 2011 now imposes a legal quota.

A new article 518bis is inserted in the Belgian Code of Companies, which provides that companies whose securities are admitted for offering for negotiation on a regulated market, are obliged to have at least one third of the members of a different gender than the other members. For the purpose of this provision, the minimum number of members of a different gender is rounded off to the nearest whole number.

The law will not take effect immediately. The legislator did not want to affect the existing mandates of the directors. Directors are usually appointed for the maximum period of six years. Therefore the quota imposed will only be applied as of the first day of the sixth financial year following the publication of this law, thus for companies whose financial year equals a calendar year, it will be as of 1 January 2017. In this way listed companies also have ample opportunity to find suitable candidates. Also companies whose securities are admitted for the first time for offering for negotiation on a regulated market should meet the quota from the first day of the sixth financial year beginning after this admission. This last provision applies from the first day of the financial year beginning after the publication of the law. So when a company, whose financial year coincides with a calendar year, is admitted to a regulated market in 2012, it will be subject to the quota as of 1 January 2018.

Companies whose value of the free marketable shares is less than 50% and also smaller listed companies, are being given a period of eight financial years to comply with the imposed quota. Smaller companies are companies, which, on a consolidated basis, have to meet at least two of the following three criteria:

an average number of employees of less than 250 persons during the relevant financial year;

total assets of less than or equal to EUR 43,000,000;

annual net turnover of less than or equal to EUR 50,000,000.

The law of 28 July 2011 also inserts the obligation to mention in the annual report the efforts taken by the company to ensure that at least one third of the members of the board are of a different gender than the other members. This provision shall apply from the first day of the seventh financial year following the publication of the law in the Belgian Official Gazette, or for companies with a financial year that coincides with a calendar year, as from 1 January 2018. Companies whose value of the free marketable shares is less than 50% and also smaller listed companies, have nine years time to meet their commitment.

The gender diversity as currently imposed by law shall also be sanctioned. If the number of directors of another gender is smaller than the required minimum, the board of directors must be composed in accordance with the quota on the next shareholders’ meeting. In default thereof any advantage, financial or other, of all the directors, in connection with the exercise of their mandate, will be suspended. The directors will enjoy these benefits again as soon as the board of directors is composed validly. This is not the only sanction. In case the required quota of directors of the opposite sex is not reached, the first director to be appointed has to be of the other gender. If not, his appointment is null and void. In an earlier version of the proposition of law, it was also proposed that all decisions of a board of directors composed in disregard of the quota would be null and void. However, this penalty was not retained in the final version of the law.

The legislative chambers shall evaluate the impact of the law on the representation of women in decision-making bodies, during the twelfth year after publication, i.e. in 2023. This provision was inserted upon the advice of the Council of State. The imposed quota is a measure of positive discrimination. A measure of positive action can be taken only if certain criteria are met:

the presence of a manifest inequality;

the elimination of inequality must be promoted as an objective to be fostered;

the measure of positive action must be temporary and of such nature that it disappears once the desired goal is achieved, and

the measure of positive action may not unnecessarily limit the rights of third parties.


The Council of State noted that these criteria are met, but not regarding the temporary nature of the measure, regarding which nothing was provided in the proposition of law proposed to the advice of the Council of State. The Council noted that once the quota of one third is reached, there is no reason why such a disposition should remain in effect. The Council therefore proposed to provide an evaluation measure, in order that the legislator would be able to give his opinion on its impact. The Chamber of Representatives followed the advice of the Council of State.

The law of 28 July 2011 also amends the law of 21 March 1991 regarding the reformation of some economic public enterprises. At least one third of the members of the board of directors appointed by the Belgian State or by a company controlled by the Belgian State must be of a different gender than the other members. The same applies to the management of the National Lottery. These provisions enter into force on the first day of the financial year following the publication of the law in the Belgian Official Gazette. The government will thus set a good example to the private companies by complying earlier with the quota.

26 September 2011

Alain De Jonge - Leo Peeters

Learn more about this topic: subscribe to our newsletter!

E-mail *