Second Act on Equal Participation of Men and Women in Management Positions (Zweites Führungspositionen-Gesetz - FüPoG II)
Composition of the management board in consideration of the women's quota
Women are still rarely found on management boards of large companies. The so-called Second Act on Equal Participation of Men and Women in Management Positions (FüPoG II) intends to remedy this situation with new binding requirements for appointments to management boards and regulations on related target figures.
Upon entry into force of the FüPoG II, statutory regulations for the appointment of women to the management boards of listed companies subject to co-determination have now been established for the first time. New obligations will also apply to the setting of target figures.
Binding requirements for the composition of the management board
Women are still underrepresented on management boards of large companies: Of the around 70 companies in the private sector affected by FüPoG II, around 30 do not have a single woman on their management board currently.
This could change with the entry into force of FüPoG II: For the first time, binding requirements will apply for the composition of the management board. The addressees of the new rules are listed companies in the private sector that are also subject to co-determination, as well as certain companies in which the German federal government holds a majority stake. In the future, the supervisory boards of the companies affected must appoint at least one woman and one man to the management board if it consists of more than three persons. The new rule does not differentiate further according to the size of the management board. If the companies affected do not comply with this, there will be legal consequences in the future: The appointment of a member of the management board in disregard of the new rules will be null and void. The new requirements apply to future appointments; however, existing mandates can be exercised until their scheduled end.
Obligation to provide reasons when setting the target figure of zero
The previous regulations for setting target figures for the proportion of women on management boards (introduced with FüPoG I in May 2015) have proven to be a "toothless tiger" in practice. The majority of the companies affected did not set any target figures at all or set a target figure of “zero” - i.e. the target of filling zero management board seats with women.
Even with the entry into force of FüPoG II, it will still be possible to set a target figure of zero. However, if the supervisory board or management board (with regard to the management level) set a target figure of zero in the future, they must give clear and comprehensible reasons. The reasoning must set out in detail the considerations on which the decision is based (sect. 76 para. 4 sent. 3 and 4, 111 para. 5 sent. 3 and 4 of the future AktG). The statement of reasons must be recorded in a form suitable for reproduction, as it is the subject of the reporting obligations (under sect. 289f para. 2 no. 4, para. 4 of the future HGB). Its publication is ensured by provisions on fines (sect. 334 para. 1 sent. 1 nos. 3, 3a and 4 i. c. w sent. 2 and 3 of the future HGB).
Conclusion: The future will show
As a result of the new mandatory requirements for the management board composition, women will in any case be mandatorily represented on the management boards of the concerned companies with correspondingly large boards in the future. However, due to the small target group, the actual impact on the proportion of women on management boards in general is likely to remain limited.
The new obligation to provide reasons when setting the target figure of zero will further support the positive trend in the proportion of women in management positions. However, it remains to be seen whether companies will actually use the obligation to provide reasons to set targets for the proportion of women that are significantly higher than zero.