Credit: Freepik

Czech Cabinet Approves Law Requiring Large Firms To Ensure Gender Balance

Large companies will be required to ensure gender balance in their management, with women making up at least one third, and the selection of board members must have clear rules, under a bill approved by the Czech cabinet yesterday, according to spokeswoman Lucie Jesatkova.

According to the report on the bill, these changes would concern six firms and banks in the Czech Republic: the CEZ state-controlled power utility, Komercni banka, Moneta Money Bank, Philip Morris CR, Kofola, and the Colt CZ Group firearms maker.

On average, women hold 32% of board seats in the European Union. In the Czech Republic, the figure is 21%, ranking 20th in the EU. The country has long been criticised for the low proportion of women in management and little progress in increasing it.

“The current legal situation does not have a positive impact on the balanced representation of women and men in the management bodies of companies,” the authors of the bill said. “It does not encourage women and does not support them in their efforts to become members of company boards. The persistence of this situation does not bring about gender balance.” 

The rules are set by last year’s European directive on improving gender balance on the boards of publicly listed companies. The Czech Republic must implement these rules by 28 December. The proposed bill would adopt the regulation in a minimalist form and the Czech legal system would not change more than European law requires, its authors say.

According to the draft, the requirements for balanced representation should apply to companies with more than 250 employees and annual turnover of more than 50 million euros or assets of more than 43 million euros. Companies would either have to have at least 40% women on their supervisory and management boards, or at least 33% women on the board of directors and management boards combined.

These rules would also apply to men if they were in the minority in the leadership.

Under the proposed bill, the rules for selecting the leadership must be clear, neutral and unambiguous throughout the entire process, from preparation through pre-selection, shortlisting and the identification of candidate pools.

If the company does not meet its target for the proportion of women and men, it will give preference to the candidate from the group which is underrepresented, where there are two candidates with comparable qualifications. If the company fails to do so, the non-preferred candidate could take the company to court.

Companies should achieve a balanced composition of their boards by mid-2026, according to the draft. They should publish information on progress and candidate selection. Fines are envisaged for non-compliance.

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