Germany set to introduce legal quota for women in boardrooms

The law will require firms to fill 30 per cent of their board with women as Germany’s big parties reach an agreement

The agreement was made as part of ongoing coalition negotiations between Angela Merkel's conservatives and the SPD following last month's election (Getty Images)

Germany is set to introduce legislation that will require German firms to allot 30 per cent of their non-executive board seats to women from 2016.

The country’s two major political forces, Chancellor Angela Merkel's conservatives and the Social Democrats (SPD), agreed on the new rules as part of negotiations to form a coalition government following September’s election.

The agreement is a step forward in negotiations which have made only modest progress since starting three weeks ago. Both sides are making concessions but the conservatives want their election victory to be reflected in the final deal.

The new quota will apply to all listed companies and those with a works council. Companies unable to appoint women to at least 30 per cent of open board seats from 2016 would be required to leave the seats vacant.

Germany introduced voluntary targets for women in top management positions in 2001, but little changed. In 2011 blue-chip companies agreed to try to boost women on boards, again through voluntary targets.

“This is an important signal to improve the career chances for women and for greater equality in the labour market,” said Manuela Schwesig, who led the talks for the SPD.

Annette Widmann-Mauz, leading the talks for Merkel's conservative Christian Democrats (CDU) and Christian Social Union (CSU), called the agreement a breakthrough for women.

CDU parliamentarian Michael Fuchs said: “It's a toad that we're going to have to swallow. There are companies where that's going to be difficult.”

Women currently hold about 12 percent of corporate board seats, according to German media reports. Among the 30 largest DAX companies, women have 101 of the 488 board seats, or 22 percent, according to the DSW, Germany's largest association of private investors.

The European Commission proposed new rules last year to require companies listed in EU countries with more than 250 workers to have 40 percent of women on their boards by 2020. But Germany and other EU countries resisted, arguing that rules should be set at the national level.

Norway, which is not an EU member, imposed a 40 per cent quota in 2003, a target reached in 2009. Norwegian companies can be liquidated if they fail to reach the target.