Photo: Freepik

Proposed Bill Would Ensure Gender Balance in Boardrooms of Large Czech Companies

Large companies in the Czech Republic should ensure a balanced representation of women and men in their management, with women comprising at least a third of board members, according to a draft bill published on the Czech government website.

The selection of members of the board of directors and councils should be transparent with clear and unambiguous criteria, the bill says.

According to the documents related to the bill, the changes would affect five companies and banks in the Czech Republic, namely the state-controlled CEZ power utility, banks Komercni banka and Moneta, tobacco company Philip Morris Czech Republic, and Kofola Czechoslovakia, a soft drink producer .

On average, women hold 32.2% of board seats in the EU. In the Czech Republic, the figure is 21%, ranking the Czech Republic 20th in the 27-member Union. The country has long been criticised for the low proportion of women in management and little progress in increasing it.

“The current legal situation does not have a positive impact on the balanced representation of women and men in the management bodies of companies. It does not encourage women and does not support them in their efforts to become members of company boards. The current legal situation is outdated from the perspective of achieving a more balanced representation of women and men. The continuation of this state of affairs would not bring improvement,” the authors of the draft said. They noted that more progress was made in states where the measures were binding, and also that studies have shown that increasing the proportion of women leads to higher performance, success and competitiveness of companies.

The rules are set by last year’s European directive on improving gender balance among members of listed company boards, which the Czech Republic must transpose into national law by 28 December 2024. According to the documents, the directive is being adopted in a minimalist form, which will not change the Czech legal order any more than required under European law.

According to the planned bill, the requirements for balanced representation should apply to companies with more than 250 employees and annual turnover of more than 50 million euros or assets of more than 43 million euros. They should either have at least 40% women on their supervisory and management boards, or at least 33% women on the board of directors and management boards combined. This also applies to men if they are in a minority on the board.

According to the proposal, the composition of the boards should be transparent and non-discriminatory, and the rules must be clear, neutral and unambiguous throughout the whole process, from the preparation through the pre-selection and shortlisting process and the identification of the candidate groups. If a company fails to meet its gender ratio target, it will give preference to the one from the under-represented group out of two candidates with comparable qualifications and backgrounds. If the company fails to do so, the non-preferred candidate could take legal action. The company would then have to prove that it had not breached the terms of the law.

Companies should achieve a balanced composition of their boards by mid-2026, according to the proposal. They should publish information on progress and the selection of candidates, and there would be fines for non-compliance. The status would be monitored by the Czech National Bank for those to whom it has granted a business permit or licence. Others would be monitored by the Government Office.

Ministries, trade unions or employers can send their comments to the draft until the end of February.

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