Germany: Quota for women on supervisory and management boards

In December 2014, the German government adopted a legislative draft which provides for a quota for women on supervisory boards and certain management positions, applicable as of 2016.  The draft will now be considered by the German parliament but is likely to be approved without significant changes.

The legislative draft contains two models:

Model 1 applies to around 110 German companies which are:

• listed on a stock exchange; and 
• subject to parity co-determination (50% employee representatives) on supervisory boards (generally, companies with more than 2,000 employees).

These companies (AG, KGaA, SE) are allotted a quota for women of 30% on supervisory boards. If the quota is not met, the respective seats stay vacant.

Model 2 applies to around 3,500 German companies which are:

• listed on a stock exchange; or
• subject to (parity and one-third) co-determination on supervisory boards (companies with more than 500 employees).

These companies (AG, KGaA, GmbH, eG, VVaG, SE) decide on their own targets and deadlines (first deadline not longer than 2 years, thereafter not longer than 5 years) for the increase of the percentage of women in supervisory boards, management boards and the top two management levels below.

Targets must (i) include at least one member of each gender on each level and (ii) not go below the current level and, once 30% is reached, be 30%.

Actions for employers

Companies subject to model 1 will need to take steps to satisfy the minimum quota of 30% of each gender on the supervisory board applicable to any elections from January 2016.  There will be a duty to publish in the Federal Gazette (Bundesanzeiger) whether the quota has been met and, if not, the reasons for failure.

Companies subject to model 2 will need to stipulate targets and deadlines by 30 June 2015.  They should evaluate the current number of women in supervisory boards, management boards and the top two management levels below. This will inform the preparation of targets to be implemented by the end of the deadlines.  There will be a duty to publish in the Federal Gazette what the targets and deadlines are, whether they have been met and, if not, the reasons for failure.