Czechia: Women should make up at least a third of the management of large companies

13 June 2024

Large Czech companies should ensure a balanced representation of women and men in their management. Women should make up at least a third of the board. The selection of members of the board of directors and councils would have to have clear and unambiguous rules. This is provided for in the draft law to promote balanced representation, which was approved by the government yesterday with amendments. The change from the draft concerns the coordination task for the government office, said cabinet spokeswoman Lucie Ješátková.

According to the bill’s documents, the changes would affect six companies and banks in the Czech Republic. Women hold an average of 32 percent of seats on company boards in the EU. In the Czech Republic, the figure is 21 per cent. This puts the Czech Republic in the top twenty-seven and it 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 persistence of this situation does not bring about gender balance,” the authors said in their submission. In their original version, they wrote that the current legal situation is outdated from the perspective of achieving a more balanced representation of women and men.

The rules are governed by last year’s European directive on improving gender balance among members of the boards of so-called listed companies. The Czech Republic must put them into practice by 28 December. According to the documents, it adopts the regulation in a minimalist form and the Czech legal system does not change more than European law requires.

The requirements for balanced representation are to apply to companies with more than 250 employees and an annual turnover of more than €50 million or assets of more than €43 million, according to the forthcoming law. Companies would either have to have at least 40 percent women on their supervisory and management boards, or at least 33 percent 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 documents, the law would apply to ČEZ, Komerční banka, Moneta Money Bank, Philip Morris ČR, Kofola Československo and Colt CZ Group.

According to the proposed law, the rules for selecting management must be clear, neutral and unambiguous throughout the entire process, from preparation through preliminary and shortlisting and the determination of candidate groups. If a company fails to meet its target for the proportion of women and men, it will give preference to the one belonging to the underrepresented group out of two candidates with comparable qualifications and qualifications. If the company fails to do so, the non-preferred candidate could take the company to court and seek “compensation, including monetary damages”. The company would have to prove that it did not make a mistake.

Companies would have to achieve a balance in their boards by mid-2026, according to the documents. They would have to publish information on the progress and selection of candidates. There would be fines for non-compliance.

Source: CTK

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