Proposal for legislation on gender representation on company boards:

Two-year deadline to increase female representation on company boards

The Government proposes rules for gender representation on the boards of all State-owned enterprises and privately owned public limited companies.

“We want to have at least forty per cent of both sexes on company boards and find it necessary to make this a legal requirement. The private sector now has a deadline of just over two years to get women in place on company boards,” say Minister of Children and Family Affairs Laila Dåvøy (Christian Democratic Party) and Minister of Industry and Trade Ansgar Gabrielsen (Conservative). If this is achieved voluntarily in the course of 2005, the rules will not enter into force.

“It is a question of democracy. We regard this legislation as an important step towards equality between the sexes, a fairer society and a more even distribution of power, and as an important factor in the creation of wealth in society. A greater representation of women on company boards will strengthen management and competitive ability in the business sector,” Ms Dåvøy points out.

The Government proposes amendments in company law relating to the composition of boards in all state-owned enterprises. It proposes that corresponding rules be incorporated in company law for public limited companies with private owners. The proposed rules stipulate that the boards of these companies must have a minimum number of each sex, approximately forty per cent.

The Government has been working to improve gender representation on company boards since the spring of 2002. In Norway, the average percentage of women elected to the boards of privately owned public limited companies is only 7.3. In enterprises that are owned wholly by the State, the target of forty per cent has already been reached. Here the percentage of women is 45.7.

“The low percentage of women on company boards is unfortunate, and we find it absolutely necessary to intervene in order to promote a social development which recognizes and makes use of the competence of both sexes. The present situation means that society is not making use of the resources that women’s competence represents. In view of women’s high standard of education and rate of employment, it is paradoxical that there are still so few women in top management positions in the business sector,” says Ms Dåvøy.

The Government has invited the social partners to enter into a cooperation agreement, with a view to increasing the percentage of women on the boards of public limited companies in the private sector. This is bound up with the Government’s decision that the new rules will not come into effect if the objective of a balanced gender representation is achieved voluntarily.

No rules regarding gender representation have been proposed for privately-owned limited liability companies. Most limited liability companies in Norway are small family companies, where members of the family sit on the board. The gender representation rules will not be so suitable for these companies. In public limited companies, however, share ownership is normally more widely spread and there is less personal involvement in the management of the company.