Clarification of the Rules on Gender Composition on the Board of Directors
23 October 2013
A new bill introduced as part of the government's legislation programme entails a clarification - but not a change in practice - of how the threshold values of the rules on more women on the boards are to be applied in group structures.
By Act no. 1393 of 23 December 2012 a requirement was implemented to the effect that the largest companies in Denmark were to lay down target figures for the share of the underrepresented gender in the top management as well as prepare a policy for increasing the share of the underrepresented gender at the company's other management levels. The rules have previously been mentioned in our Newsletter of January 2013 [indsæt link].
The rules apply to, inter alia, state-owned public companies, listed companies, large commercial enterprises, large commercial foundations and a number of financial enterprises.
Large commercial enterprises are enterprises in accounting class C, which exceed two of the Danish Financial Statements Act's following three thresholds in two consecutive financial years: (i) a balance sheet total of DKK 143 million, (ii) a net turnover of DKK 286 million, and (iii) an average number of 250 full-time employees.
On 2 October 2013, the Danish Minister for Business and Growth introduced a new bill on amending the Danish Companies Act and several other acts. The objective of the bill is to clarify that the above rules also include parent companies which on their own are not considered as large companies but which are parent companies to large group companies. Consequently, a new section is inserted in the Companies Act, the Act on Large Commercial Companies etc., in which it is clarified that the calculation of the mentioned threshold values to determine whether a company is subject to the rules must be carried out at a group level if the parent company prepares the group consolidated accounts. If the group exceeds the threshold values, the parent company will be obligated to prepare target figures and policies.
It appears that the bill merely provides a clarification as it was the intention, when preparing the rules, that the new rules were also to include parent companies controlling large group companies.
The rules apply to, inter alia, state-owned public companies, listed companies, large commercial enterprises, large commercial foundations and a number of financial enterprises.
Large commercial enterprises are enterprises in accounting class C, which exceed two of the Danish Financial Statements Act's following three thresholds in two consecutive financial years: (i) a balance sheet total of DKK 143 million, (ii) a net turnover of DKK 286 million, and (iii) an average number of 250 full-time employees.
On 2 October 2013, the Danish Minister for Business and Growth introduced a new bill on amending the Danish Companies Act and several other acts. The objective of the bill is to clarify that the above rules also include parent companies which on their own are not considered as large companies but which are parent companies to large group companies. Consequently, a new section is inserted in the Companies Act, the Act on Large Commercial Companies etc., in which it is clarified that the calculation of the mentioned threshold values to determine whether a company is subject to the rules must be carried out at a group level if the parent company prepares the group consolidated accounts. If the group exceeds the threshold values, the parent company will be obligated to prepare target figures and policies.
It appears that the bill merely provides a clarification as it was the intention, when preparing the rules, that the new rules were also to include parent companies controlling large group companies.
