EurWORK European Observatory of Working Life

French law to increase number of women directors

About

Country: 
France
Author: 
Sarah Mongourdin-Denoix
Institution: 
HERA

The number of women company directors is expected to go up in France after its parliament passed a law on 13 January 2011 setting quotas for the gender balance of company boards. Within the next three years, 20% of a company’s board members must be women, rising to 40% within the following six years. This applies to companies quoted on the stock exchange (CAC 40), or those with more than 500 employees, with a turnover exceeding €50 million over the previous three years.

Details of the law

This measure is targeted at companies listed on the stock exchange, the CAC 40, and non-quoted companies with at least 500 employees and a €50 million turnover over the previous three consecutive years. Public companies regulated by commercial law, such as industrial and state-owned companies, are also covered.

Other public bodies, such as universities or administrative institutions, are exempt, although parliament has demanded that the government submit a report before 2015 about gender equality in these institutions. This report should outline any improvements made, as well as the steps needed to reach a minimum representation of 40% for each gender.

Under the new law, a list of candidates for election to a board must be divided between men and women, with a maximum difference of one. If the board has eight members or less, the difference between the genders cannot exceed two. When the composition of the governing board changes and no longer fulfils the quota, temporary nominations must be made.

If these thresholds are not reached, the directors will not be paid. The law initially provided that any decisions made by a board not fulfilling the quota would be invalid, but this clause was withdrawn from the final version of the text. However, any nomination to a board that fails to respect the quotas is automatically invalid.

2,000 companies could be affected

The share of women currently on governing boards is about 12%–14%. According to the European Professional Women’s Network (EuropeanPWN), the rate of women on governing boards has increased from 8% in 2008 to 12% in 2010. The consultancy firm InvestorSight says that companies have anticipated the law, with an increase of 11%–14% of women in the top companies listed on the CAC 40 between 2009 and 2010.

It is estimated that about 2,000 companies could be affected by this law. Some commentators have stressed the potential difficulties of finding so many qualified women to fulfil the quotas.

Measure initiated by the governing political party

The bill was initiated by Jean-François Copé, Secretary General of the ruling party Union for a Popular Movement (UMP), and fellow party member and MP Marie-Jo Zimmermann. The law has been adopted by the ruling party and backed by the opposition, which felt it did not go far enough.

The measure was seen as necessary in order to catch up with Scandinavian companies, whose governing boards have substantially higher levels of women members. Germany and the United Kingdom are also discussing similar measures.

Laurence Parisot, head of the main French employer association, the Movement of French Enterprises (MEDEF), welcomed the initiative, which it had recommended in a document (in French, 146 Kb PDF) published in April 2010. At the same time, it also published guidance (in French, 436Kb PDF), in collaboration with the French Association of Private Companies (AFEP).

Commentary

Such a measure is not only necessary to enhance the corporate image of businesses. A 2009 study (in French, 88Kb PDF) by Belghiti-Mahut and Lafont has highlighted the different ways in which women and men manage companies and the positive impact of women managers on companies’ performance. Governing boards are often criticised for being highly homogeneous, something seen as detrimental to the management of the companies.

Sarah Mongourdin-Denoix, HERA