Most companies fulfil female board representation quota

When the transition period of the new legislation stipulating 40% female representation on company boards expired on 1 January 2008, around four out of five Norwegian companies had met the requirement. A minimum proportion of approximately 40% of both sexes must now sit on the boards of all major Norwegian companies. The rules apply to more than 500 privately-owned public limited companies in Norway, among them the largest private sector companies.

The deadline to fulfil the requirements of the new rules on gender representation on company boards expired at the end of December 2007. The purpose of the new regulation is to ensure that women and men have equal opportunities to be represented on company boards. The ruling states that there should be a minimum proportion of approximately 40% of both sexes on the board of companies. The legislation applies to all privately-owned public limited companies (allmennaksjeselskaper, ASA). Most of the larger private sector companies or corporate groups are organised as ASA since this is a requirement for being listed on the stock exchange. The regulation came into force on 1 January 2006, and the companies were given a transition period of two years to meet the requirements with regard to gender representation, that is, until the end of 2007 (NO0602102F).

Four out of five companies have met requirement

Statistics Norway (Statistisk Sentralbyrå, SSB) is the main source of relevant statistics on gender representation on company boards. The latest figures from SSB, describing the situation by the end of the deadline for complying with the new legislation, show that four out of five ASA met the requirement of gender balance on company boards by 1 January 2008. The number of companies conforming to the requirements has increased from 17.5% on 1 January 2006 – when the legislation came into force – to 78% two years later.

Only 517 privately-owned ASA are registered in Norway, and as such the regulation on gender representation only covers a minority of private sector companies and employees. However, the largest companies and groups of enterprises will normally be organised as ASA, which means that the largest Norwegian groups within for example the oil industry, the manufacturing sector and the financial intermediation sector are covered. It might be added that similar regulations have been in force for publicly-owned companies since 1 January 2006, which was the deadline to achieve the necessary gender balance.

The new regulation also applies to employee representatives. It stipulates that, where two or more board members are elected from among the employees, both sexes must be represented. This rule is not applicable in companies where one sex constitutes less than 20% of the total number of employees at the date of the election. According to SSB, only 60 of the 517 companies are covered by the regulations in this regard; the rest do not have employee representatives on their boards, or the requirements are not relevant due to the gender composition of the labour force. By the end of 2007, 75% of the 60 companies in question had a sufficient number of women among their employee-elected board members.

Overall, 36% of the board members in the companies concerned are women. However, the most prominent positions are still filled by men: 95% of the chairpersons are men, as are 75% of the deputy chairs.

Commentary

The legislation on gender quotas on company boards has proven controversial, not least in the Norwegian business community, but has received broad political support and support from trade unions. A minister from the Conservative Party (Høyre) first called for this type of legislation, but the regulation was introduced by the present centre-left government (NO0306106F). Although critics – among them the major employer and business organisations, as well as larger private investors and owners – raised practical and principle objections to gender quotas, by the end of 2007 it seems that most companies had managed to reach the necessary level of female representation without too much difficulty.

A minority of companies – 77 companies – are still without sufficient female representation. A decision was made not to introduce separate penalties for this piece of legislation, which means that the general sanctions regarding breaches of the national legislation for companies will apply. Breaches of the legislation may in the last instance mean that the company stands the risk of being forced to dissolve. According to the Ministry of Children and Equality (Barne- og likestillingsdepartementet, BLD), companies that have failed to meet the requirement will initially receive a notification in which they are given one month to resolve the matter. However, it is seen as unlikely that any company will be dissolved due to insufficient female representation on its board, as experience shows that discrepancies in the composition of the board tend to be corrected when pointed out.

Kristine Nergaard, Fafo Institute for Applied Social Science