New legislation will improve gender diversity on corporate boards

An appointment quota to improve gender diversity on corporate boards has been adopted. Today, the Dutch Senate passed the bill for this introduced by Ministers Dekker (Minister for Legal Protection) and van Engelshoven (Minister for Emancipation). This is necessary because the results achieved by the business community on increasing diversity in the boardroom have been lagging behind the targets for years. The aim is for the legislation to enter into force on 1 January 2022.

Minister Dekker:

“Organisations and companies cannot afford to focus on only half of the talent available in the Netherlands. This legislation, which really should not have been necessary, will push the business community to make a much stronger effort on increasing diversity.”

Minister van Engelshoven:

“With this historic step, we are ensuring much more equal opportunities for women and men on corporate boards in the Netherlands. With this legislation, we put an end to the ‘old boys’ club’ culture in boardroom appointments. That is good news for equality of opportunity and for the companies themselves, because diversity in the boardroom ensures better management.”

The new legislation contains two measures to promote more diversity in the boardrooms of Dutch companies. First, an appointment quota for the Supervisory Boards of listed companies, to help ensure that men and women each hold at least one third of the seats on the Supervisory Board. This quota will apply to all new appointments of Supervisory Board members. Second, it will become mandatory for large public and private limited liability companies (i.e. large NVs and BVs) to set appropriate and ambitious target ratios to improve the gender diversity on their boards and among their senior management personnel. The companies will be required to report annually on their progress.

The bill implements the advisory report by the Social and Economic Council (SER) entitled ‘Diversity in the boardroom: Time to accelerate’. The new legislation will be evaluated after five years and has a sunset clause: the appointment quota and target ratio regulations will expire eight years after its entry into force.