New Guide on Gender Composition in Management

Date 7 apr. 2015
Download PDF version PDF

 

Introduction

Since 2013, companies in reporting class C and companies in reporting class D have been required to set target figures and develop policies for the gender composition of management as well as report on this subject.

 

In cooperation with COWI, the Danish Business Authority annually reports on the development of the gender distribution in Danish companies. The latest report of February 2015 showed an average distribution of 15% women and 85% men at board level. Out of these companies, 17% met the requirement of equal distribution. Despite the low percentage, the distribution was significantly higher than the Authority’s previous report, which is a positive development.

 

At the same time, the Danish Business Authority inquires into the companies’ statements of their targets and policies for the gender composition, and the first inquiry, based on the annual reports of 2013, has caused the Danish Business Authority to elaborate on the companies' obligations under the rules. The Danish Business Authority has therefore published a Guide on Targets and Policy for the Gender Composition of Management and reporting on this (hereinafter “the Guide"), which will serve as a practical tool for the companies concerned.

 

The Main Changes

The Guide clarifies the rules that were introduced in December 2012 as previously described in our newsletter dated 6 March 2013.


The rules on target figures and policy for the gender composition of management and reporting on this applies only to companies with a registered office in Denmark. Foreign companies are not covered by the rules, but where a foreign company belongs to a group with a Danish parent company, the foreign company will be covered to the extent that targets and policy have been established  for the group as a whole.


To clarify, even gender distribution means a distribution of 40/60% of women and men, irrespective of whether it is women or men who represent the 40% or 60%. The calculation of the distribution occurs both in the supreme governing body ‒ e.g. the board of directors ‒ and the other levels of management ‒ e.g. managers and heads of departments. The target figure must be greater than the proportion of the underrepresented gender at the time of determination of the target figure, and the stated target figure must consist of the determination of a specific target and also of the declaration of the time period within which the company expects to meet its target. The target figure may be stated as a specific number or a percentage, and the time period may be specified as a period or a specific time for when the target figure must be reached.


In addition to the description of the target figure, a policy to increase the proportion of the underrepresented gender at the company's other levels of management must be formulated.


The requirement to produce such a policy only applies to companies that employ 50 or more employees. Companies with fewer employees may therefore choose not to develop this policy. Other levels of management mean e.g. managers, CFOs, team leaders, heads of departments etc. The policy must describe the actions that the companies have taken in order to increase the proportion of the underrepresented gender. This might be setting up cooperation with other companies, frameworks for each manager's career development through networking and mentoring, and internal target figures. It is of critical importance that the company makes active efforts.


The companies concerned must report on their progress in achieving the stated target figures, including why the company may not have achieved the intended objective.


This statement must be made annually in connection with the annual report and must contain a description of the target figure, the current composition, status of meeting the target figure, and an explanation of any non-compliance.


Companies obliged to compose a policy on the other levels of management must also account for this, including how the policy is to be transformed into actions and the targets been achieved by it.


The reports must be provided as a supplementary report to the management report and on the company's website.

 

Our Opinion

The Guide provides practical descriptions and examples of the composition of target figures and policies that will serve well as help for the companies' future preparation of target figures and policies.


It is still important that companies covered by the rules are aware of the continuous work with the target figures and policies, as lack of compliance could lead to a fine. It should be noted that only non-implementation of the rules is punishable by a fine, while failure to meet the target figures is not fine sanctioned.



If you have any questions or would like additional information regarding the above, please contact partner Pernille Nørkær (pno@mwblaw.dk) or trainee Sarah Emilie Ginsborg (seg@mwblaw.dk).  

 

The above does not constitute legal counseling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.