The road to parity: The new Organic Law and its impact on business representation

The regulation establishes that the boards of directors of the companies included within its scope of application must have a composition in accordance with the principle of parity, so that the number of women may not be less than 40% of the total number of board members.

The companies that will be affected by the rule once it is approved are: (i) listed companies and (ii) entities considered to be of public interest in accordance with the Audit Law, as from the financial year following the one in which the following requirements are met: (a) the average number of employees employed during the financial year is greater than 250 and (b) the net annual turnover exceeds 50 million euros or the total asset items exceed 43 million euros.

Companies that do not comply with this obligation must adjust the selection processes in such a way that a non-discriminatory procedure is established to ensure that this objective is achieved.

In the case of listed companies, non-compliance with these provisions is considered a serious infringement, which may result in the imposition of sanctions up to and including suspension from stock exchange listing and public reprimand. Fines can reach the higher of the following amounts:

(a) Three times the gross profit made as a result of the acts or omissions constituting the infringement,

(b) 2 per cent of the institution's own resources,

(c) 2 per cent of the total funds, whether its own or those of third parties, employed in the infringement, or

d) 300,000 euros.

The Draft also establishes the principle of gender equality in senior management positions for listed companies, with the objective of reaching 40% of the under-represented sex. In case of non-compliance with the obligation, the reasons and measures taken must be explained, in line with the "comply or explain" principle.

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