Czech govt. unveils new bill to ensure gender-balanced corporate boards

The Czech Republic has long lagged behind other EU countries in terms of gender balance in the corporate world, but efforts are being made to change that. The Czech government has unveiled a new draft bill aimed at ensuring gender balance in the management of large businesses in the country.

The proposal, published on the government's website, would require that women comprise at least one-third of board members within large companies. It outlines a transparent selection process for board and council members, emphasizing clear and unambiguous criteria.

The legislation is expected to impact five major companies and banks in the Czech Republic, including the state-controlled ČEZ power company, banks Komerční banka and Moneta Money Bank, tobacco company Philip Morris Czech Republic, and Czech soft drink producer Kofola.

Currently, women hold 32.2 percent of corporate board seats on average in the EU, whereas in Czechia, the figure is 21 percent. That ranks the country 20th out of the 27 EU member states. Critics have long chastised Czechia for its low representation of women in management, prompting the government's move towards gender balance.

Authors of the new bill argue that the existing legal framework hampers gender equality and does not encourage women to pursue leadership roles. They contend that a binding approach, as seen in other nations, promotes progress, citing studies linking increased female representation to enhanced company performance, success, and competitiveness.

The proposed legislation aligns with the recent European directive on improving gender balance within listed company boards. Czechia, required to adopt the directive by December 28, 2024, plans to do so in a minimalist form, in line with European law.

The bill suggests that companies with over 250 employees and an annual turnover exceeding 50 million euros or assets exceeding 43 million euros must meet specific gender representation requirements.

This includes having at least 40 percent of women on supervisory and management boards or a minimum of 33 percent of women on combined boards of directors and management.

The composition of boards should adhere to transparency and non-discrimination principles throughout the selection process. If a company fails to meet gender ratio targets, it must prioritize the under-represented candidate out of two equally qualified individuals, or face legal consequences.

The proposed deadline for companies to achieve a balanced board composition is mid-2026, with mandatory progress reports. Failure to comply may result in fines, monitored by either the Czech National Bank or the Government Office. Comments on the draft bill can be submitted by ministries, trade unions, or employers until the end of February.