Gender quotas in corporate boards : a legal study

Abstract

Gender quotas on boards of directors are proliferating, especially in European countries. Norway was the first State to introduce an enforceable corporate quota law in 2006. Within ten years, this trend was followed in Iceland, Belgium, France, Italy and Germany. Other European countries have also adopted measures to increase gender diversity on company boards, but have chosen a softer approach by including targets in Corporate Governance Codes, or by imposing quotas that are not accompanied by sanctions. Research shows that a binding quota law that is complemented by penalties for non-compliance achieves the highest rate of progress in a defined timeframe. A legal basis for gender quotas can be found in international, European and Maltese legal instruments, with CEDAW being the broadest and most pertinent instrument in the field of gender equality. Although quotas are often accused of breaching men’s human rights, specifically the right to non-discrimination, a substantive equality approach views quotas as an integral means of achieving full equality between the sexes. Moreover, the proportionality of a quota law ensures that a balance is maintained between shareholders’ and companies’ rights on the one hand, and the right to full gender equality on the other. Malta continuously ranks at the bottom of every list when it comes to gender balance on the boards of large companies. Currently, shareholders in Maltese companies enjoy complete freedom to appoint any director of their choice, and the result is that the appointed directors are almost exclusively male. Indeed, the percentage of female directors in the largest listed companies is below 5%. This thesis concludes that this issue must be regulated if Malta is to witness any improvement. Large public and private companies should be given the opportunity to set and abide by targets voluntarily. In the absence of satisfactory progress, a binding corporate quota law should be adopted.