Belgium

Jenna McGrath, Associate
Paul Hastings (Washington, DC)

Belgian Mandatory Quota

Belgium is one of the few countries that have embraced mandatory quotas for public companies, and is referred to by advocates that support “hard” laws as one example of mandatory quotas working to increase board diversity.1

In September of 2011, Belgium adopted the “Act to amend the Act of 21 March 1991 for reform of certain public economic enterprises, public companies and the law of 19 April 2002 on the rationalization of the operation and management of the National Lottery in order to ensure the presence of women on the board of directors of publicly listed companies and the National Lottery” (the “Law”).  The Law, which became effective in 2012, requires that Belgium’s largest publicly traded companies and certain state-owned or -controlled entities achieve gender parity by requiring that at least one-third of the entity’s directors be of a different gender than other members of the board.  Companies listed in a regulated market had until fiscal year 2017 to comply, and smaller companies (such as those with less than 250 employees and with lower net sales or balance sheet totals) have until fiscal year 2019.  The quotas became immediately effective after the law’s publishing for state-owned entities.  Functionally, this requires at least one-third of each board to be comprised of women.2  Under the Law, the legislative chambers will evaluate the effectiveness of the law in 2023 (the twelfth fiscal year after publication).3

For state-owned or -controlled entities, the Law provides for certain procedures if the quota is not met.  For example, if the board is not composed of at least one-third women, the next appointed director must be a woman.  Any appointment made in violation of this Law is void.4 Unlike the financial penalties imposed on publicly-listed companies (see below), the law does not provide for monetary sanctions for state-owned enterprises or the National Lottery.

For publicly-listed companies, the Law also amended the Belgian Business Code to impose a similar quota and sanctions for boards that did not follow the law,5 i.e., boards must have at least one-third of a different gender than the rest of the board.6  If the company does not meet the quota at any time after the quota’s relevant effective date, the next appointee must be of the underrepresented gender, or the appointment is void.  If the board does not meet the quota, it is required to take actions to meet the quota at its next general meeting.  Benefits to the directors (e.g., financial rewards and other benefits) are to be suspended and not to be paid in the future for that period, and such benefits may not recommence until the board is compliant.  This creates a strong financial incentive for board members to ensure the quota is met and, by imposing monetary sanctions on directors personally, is one of the more stringent quota-based laws.7    

Effectiveness of the Quota

After enactment of the Law, the percentage of female board members increased at a sharply faster rate than in other Member States of the EU that had “soft” laws, e.g., that did not impose quotas and/or involve sanctions for non-compliance.8  As of October 2017, women represented 30.7% of board members of the largest publicly listed companies in Belgium, exceeding Europe’s total percentage of 25.3%.9  For Belgium, this represents a 20.2% increase from 2010, immediately before the Law took effect.10 The Law has been extremely effective in closing the gender divide, and is often referenced as an effective model for mandatory standards with meaningful sanctions.

Gender Parity Initiatives

Women on Board is a non-profit association started by women with the goal of “increasing female board representation in Belgian private and public enterprises….”11 It was launched in 2009, funded in part by the Belgian Institute for Equality of Women and Men.12 Women on Board’s mission is to create a “pool” of qualified women by providing mentoring and training opportunities, and to facilitate relationships with Belgian companies looking for female board directors. Women on Board has introduced a Women Intergenerational Digital Dialogue Program, which aims to provide young high-potential women with mentoring on management and corporate governance, in return for the mentees providing “reverse mentoring” on technology skills.13  The pool has grown to hundreds of women with high-profile company partners.

General Diversity Laws and Initiatives

Belgian Diversity Laws

Article 10 of the Belgian Constitution provides that “No Class distinctions exist in the State.  Belgians are equal before the law” and “[e]quality between women and men is guaranteed.”  Article 11 provides that the “rights and freedoms recognized for Belgians must be provided without discrimination.”14  However, the Constitution does not provide further detail on the types of diversity it is intended to protect.

More specific prohibitions against discrimination are found in federal legislation.  The Gender Act of May 10, 2007 proscribes discrimination on the basis of sex, maternity, pregnancy, and transgender status.  The Discrimination in General Act of May 10, 2007 prohibits discrimination based on additional criteria, including sexual orientation, birth, wealth, religious convictions or philosophies, political convictions, health, handicap, union affiliation, language, physical or genetic characteristics.  The Race Act of May 10, 2007 prohibits discrimination on the basis of national origin, ethnicity, race, or color.  Individuals who have been discriminated against in the course of employment have recourse under civil law to file discrimination charges if they are discriminated against on the basis of any of these characteristics. These laws, which were primarily amendments of previously existing laws, were implemented to meet the requirements of EU directives on the same topics.15  Various laws covering these same protected classes have also been implemented at the regional level.

Diversity Charters

Companies can also sign voluntary diversity charters issued by regional government entities to demonstrate a commitment to diversity.  These charters encourage companies to implement diversity principles and signal a commitment by such companies.  For example, the Brussels-Capital Region Diversity Charter (the “Brussels Charter”) was implemented in 2005.16  Those companies signing the Brussels Charter make several commitments to diversity, including having a defined diversity plan and promoting diversity principles in human resources. At last count, the Brussels Charter had over 162 signatories. Other diversity charters in Belgium include the Walloon Diversity Charter and the Flemish Action Plan. 

Conclusion

As an early adopter of mandatory quota laws, Belgium is cited by advocates of such quotas as an example of how “hard laws” can be effective in advancing gender equality on corporate boards.  Belgium’s law not only voids appointments inconsistent with the quota, but provides a financial disincentive for board members who do not bring their boards into compliance.  Likely as a result of the strength of this mandate, Belgium has notably exceeded Europe’s pace in advancing board gender equality.  


1  See e.g., Simona Comi et al., Quotas Have Led to More Women on Corporate Boards in Europe, London Sch. of Econ. Bus. Review (Aug. 2016), http://blogs.lse.ac.uk/businessreview/2016/09/30/quotas-have-led-to-more-women-on-corporate-boards-in-europe/; Women in the boardroom: A global perspective, Deloitte 46 (2017), https://www2.deloitte.com/content/dam/Deloitte/za/Documents/technology-media-telecommunications/za_Wome_in_the_boardroom_a_global_perspective_fifth_edition.pdf.

2  For purposes of calculating the quota, the minimum number is rounded to the nearest whole number.

3  Law of 28 July 2011, to ensure that women have a seat on the board of directors of
state-owned enterprises, listed companies, and the national lottery, Moniteur Belge, 2 Ed., 59600 (Sept. 14, 2011), art. I (Sept 14, 2011).  The law provides nearly identical provisions for the National Lottery.

4  Id.

5  The 2009 version of this law recommends that boards of directors reflect gender diversity as a standard practice, but did not include the mandatory quota requirements.

6  Law of 28 July 2011, art. III.

7  Id., ch. 3.

8  Comi, supra note 1.

9  2018 Report on Equality Between Women and Men in the EU, European Commission 31 (2018), http://ec.europa.eu/newsroom/just/document.cfm?doc_id=50074.

10  Id. at 32.

11  Women on Board, About, http://www.womenonboard.be/about/history (last visited Sept. 12, 2018).

12  Id.

13  Women on Board, Mentoring and Training,http://www.womenonboard.be/mentoring-training (last visited Sept. 12, 2018).

14  Belgian Constitution. art. 10-11 (English translation), https://www.dekamer.be/kvvcr/pdf_sections/publications/constitution/GrondwetUK.pdf.

15  Country Report, Non-Discrimination: Belgium, European Commission (2017), https://www.equalitylaw.eu/downloads/4348-belgium-country-report-non-discrimination-2017-pdf-2-36-mb.

16  Belgian Diversity Charter, European Commission, https://ec.europa.eu/info/policies/justice-and-fundamental-rights/combatting-discrimination/tackling-discrimination/diversity-management/diversity-charters-eu-country/belgian-diversity-charter_en (last visited Aug. 29, 2018).