Breaking that glass ceiling

As one of the several EU initiatives to narrow that unwanted gender pay gap, the European Union adopted what is known as the Women on Boards Directive, now also transposed into Maltese law (as from December 2024).

The Directive was first proposed in 2012, supported by the European Parliament in 2013, but only formally adopted as a Directive in late 2022.

What’s the point?:

Equal treatment and opportunities for women and men, and the principle of equal pay for work of equal value amongst genders, are principles long enshrined in the EU Treaties and the European Pillar of Social Rights.

Yet in 2022, women made up only 34.1% of non-executive board members in the EU-27’s largest listed companies. Only France was nearing equality (48.7%).

Some EU Member States, such as France, Italy and the Netherlands have had domestic laws which require listed companies to satisfy binding gender quotas on boards. Others imposed softer measures, and the rest did not include any requirements. Statistics published by the European Institute for Gender Equality prove that where there are binding gender quotas, better results are achieved.

This Women in Boards Directive, and the new regulations aim to ensure that by mid-2026, all listed companies within the EU have at least 40% female non-executive directors or at least 33% female representation among executive and non-executive directors combined.

What are the new Obligations?

• Recruitment & Selection: Listed companies must ensure balanced representation of both genders in their recruitment and selection processes, with no discrimination. Equally qualified candidates from the underrepresented gender must be given priority for board positions.
• Disclosure: Listed companies must publicly disclose their progress towards meeting these gender balance targets in their corporate governance statements and on their websites.
• Penalties: Non-compliance with these regulations may result in penalties.
• Fun Fact: The EU Directive comes with an Expiry Date! It is meant to be temporary and is set to expire on the 31st December 2038.

Enforcement in Malta: The regulations have been transposed into Maltese law and are enforceable as of 24 December 2024. The National Commission for the Promotion of Equality for Men and Women (NCPE) and the Malta Financial Services Authority (MFSA) are responsible for monitoring and supporting gender balance on boards.

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