Avocats

One of the aims of the French PACTE Law (Action Plan for Business Growth and Transformation) is to increase gender equality within companies.

Since 2011, members of the Board of Directors or the Supervisory Board of limited liability companies (sociétés anonymes) must be appointed “with the aim of achieving a balanced representation of women and men”.

With regard to publicly listed limited liability companies and companies that exceed certain thresholds (500 employees and a net turnover or total assets of €50 million for three consecutive years), the proportion of either male or female members of the Board of Directors or the Supervisory Board cannot be less than 40%. If such Boards have 8 members or less, the difference between the number of male and female members may not be more than 2.

Until now, any appointment made in violation of these rules was considered invalid, however the law specified that such invalidity did not make the process, in which the irregularly appointed member took part, invalid.

The PACTE Law eliminates this exception and now allows a judge to rule on the invalidity of the process and deliberations in which the irregularly appointed member participated.

The PACTE Law also introduces the following new provisions:

    – The requirement to seek a balanced representation of men and women on the Board of Directors or the Supervisory Board has been extended to the members of the Management Board.

    – In making recommendations to appoint Deputy Chief Executive Officers, the Chief Executive Officer must now endeavor to seek a balanced representation of women and men. The Board of Directors is required to put in place a procedure that ensures throughout the appointment process, that there is at least one male and one female among the candidates for Deputy Chief Executive Officer positions. The Supervisory Board is also required to comply with this requirement when appointing members to the Executive Board.

Although the law currently does not specify any penalty for failure to comply with these requirements, members of such Boards may nonetheless be held liable for non-compliance.

© Schmidt Brunet Litzler