The adoption of Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and related measures, commonly referred to as the Gender Balance on Boards Directive, introduces EU-level requirements aimed at improving gender balance on the board of directors of listed companies.

Four years after its adoption, the Gender Balance on Boards Directive requires EU members states to ensure that listed companies comply, by the 30 June 2026, with the requirements and objectives set out therein. The purpose of the Gender Balance on Boards Directive, as set out its Article 1, is “to achieve a more balanced representation of women and men among the
directors of listed companies by establishing effective measures that aim to accelerate progress towards gender balance, while allowing listed companies sufficient time to make the necessary arrangements for that purpose”.

Specifically, the Gender Balance on Boards Directive – which applies solely to listed companies (i.e. companies which have their registered office in a member state and whose shares are admitted to trading on a regulated market within the meaning of Directive 2014/65/EU in one or more member states) and expressly excludes micro, small and medium- sized enterprises from its ambit – requires listed companies to ensure one of the following:

1. That members of the underrepresented sex hold at least 40% of non-executive director positions; or
2. That members of the underrepresented sex hold at least 33% of all director positions, including both executive and non-executive directors.

For completeness, it is noted that the term “underrepresented sex” is not defined anywhere in the text of the Gender Balance on Boards Directive, maintaining a gender-neutral approach; that being said, it is presumed that, typically, the said term refers to women.

The Gender Balance on Boards Directive also provides for a clear, transparent and non- discriminatory assessment of the selection of candidates for appointment or election to director positions. Such assessment must be applied throughout the entire selection process (Article 6), noting that member states should ensure that, in case candidates are equally qualified in terms of suitability, competence and professional performance, priority shall be given to the candidate of the underrepresented sex, unless exceptional circumstances apply.

In terms of non-compliance, the Gender Balance on Boards Directive does not prescribe a uniform set of penalties at EU level; rather, it leaves it up to the member states to decide at national level, provided however that such penalties are effective, proportionate and dissuasive (Article 8). These may include fines or the annulment or nullity of appointments made in breach of the applicable selection rules.

In light of the above, listed companies falling within the scope of the Gender Balance on Boards Directive are encouraged to review the composition of their board of directors and their selection processes, in order to ensure that these align with the requirements set forth by the Gender Balance on Boards Directive.

June 2026, Antis Triantafyllides & Sons LLC, Nicosia, Cyprus