María Pilar García Guijarro, Managing Partner
Ana Calvo Abril, Senior Associate
Watson, Farley & Williams Spain

Legislative Efforts

The right to equality was proclaimed in Spain in 1978, with the enactment of the Spanish Constitution. Specifically, Article 14 of the Spanish Constitution states that “Spaniards are equal before the Law, thus no discrimination for reasons of birth, race, sex, religion, opinion, or any other condition or circumstance may prevail.” The right to equality under the Constitution expressly recognizes the inherent equality between women and men.

A number of regulations were enacted in order to implement the Constitutional mandate articulated in Article 14 with regard to gender parity. Such regulations, although binding, proved to be ineffective, as parity in different areas, especially in labor and business-related areas, had not been achieved. Therefore, on March 22, 2007, the Spanish Congress enacted Law 3/2007 on effective equality between women and men (the “Law on Equality”), with the intent to unify these disparate regulations and to establish a single norm for equality and gender parity.

The Law on Equality incorporates into the Spanish regulation several European directives, including Directive 2002/73/EC of the European Parliament and of the Council of 23 September 2002 and Council Directive 2004/113/EC of 13 December 2004.

The Law on Equality introduces a provision for companies2 to establish boards of directors with a “balanced presence” of women and men. A balanced presence is defined, by the Law on Equality, as a maximum presence on a board of each gender of 60 % and a minimum presence of 40 %.

Additionally, regional legislation in Spain, such as those in the Autonomous Regions of Galicia and Extremadura, include provisions similar to those set forth in the Law on Equality. Galicia’s3 legislation includes the obligation that companies with a corporate address in that region must annually inform the regional administration of the composition of their boards of directors. Upon review of such information, the administration will issue public or private recommendations. The legislation of the Autonomous Region of Extremadura4 mandates that regional administrations that hold stakes in private companies must appoint members of their boards in accordance with the “balanced presence” principle.

Companies have a period of eight years from March 24, 2007, the date when the Law on Equality entered into force, to comply with the “balanced presence” legal requirement.

According to the 2013 study of women on boards of directors and decision-making bodies of Spanish companies published by the Cesce Group (the “Cesce Report”), there has been tangible improvements as a result of the above legislation. The Cesce Report found that women represented 29.02 % of boards of directors and decision-making bodies in 2012; however, this percentage has fallen to 25.94 % in 2013. Further, the Cesce Report confirms that companies lacking a female presence on their boards of directors are in sectors typically considered to be more male-dominated, such as construction, energy production, and extraction industries. Additionally, according to the Cesce Report, in companies with state ownership, the presence of women on boards has consistently increased from 25.30 % in 2008, 30.75 % in 2012 and 32.56 % in 2013. An interesting trend noted in the Cesce Report is that companies with more than 40 % women on their boards of directors take on less credit than companies with a lower representation of women directors when compared with the whole business community. In fact, companies with greater than 40 % women directors assume a credit risk of 70.67 % versus 84.21 % assumed by companies with fewer women directors.

The chart below summarizes the percentage of women on boards in 2012 and 2013.5

2012 2013
Women on boards of directors and decision-making bodies (Total figures) 29.02% 25.94%
Women on boards of directors and decision-making bodies in companies with state ownership 30.75% 32.56%
2012 2013 Women on boards of directors and decision-making bodies (Total figures) 29.02% 25.94% Women on boards of directors and decision-making bodies in Companies with State ownership 30.75% 32.56%

However, it is notable that only 11.23 % of firms subject to the Law on Equality have more than 40 % women directors, according to the Cesce Report.

Therefore, although the data mentioned above indicates that the legal requirement has not yet been achieved, companies have until 2015 to adopt the necessary measures to have a more balanced ratio of women on their boards of directors. Moreover, it seems that companies are taking some positive steps toward this goal, although at a slow pace.

The slow progress toward achieving these legal thresholds may be the result of the fact that, contrary to other jurisdictions, there is no statutory penalty for noncompliance in Spain. The Spanish legislature did not include sanctions in the event companies do not adopt the necessary measures by 2015. Currently, companies only need to disclose, through their annual accounts6 (or by other means imposed by sectoral and regional regulations) the gender composition of their boards of directors.

Instead of encouraging compliance through sanctions, the Law on Equality has attempted to induce companies to develop gender equality policies and plans by creating other incentives, such as an “award” for companies that implement equality policies internally. Such policies include, among others, a balanced presence of women and men on the boards of directors, as well as in the various groups and categories of company employees. In May 2012,7 this award was given to 30 companies including Acciona Ingeniería, S.A., Banco Bilbao Vizcaya Argentaria, S.A., CaixaBank, S.A., and Ernst & Young, S.L. It is important to highlight the fact that certain Autonomous Regions have also established awards for companies that comply with local equality regulations.

There may be reasons other than the lack of sanctions for the slow implementation of gender parity on corporate boards. In particular, the issue of gender parity on boards of directors, although endorsed by the Spanish legislatures (both national and regional as described above), is still debated among scholars. In general, there are two main views. On one hand, those who defend the benefits of gender parity on boards state that it provides the boards of directors with more talent, increased creativity and innovation, and that it represents a vision of society that more accurately reflects its actual composition. The main counter-arguments articulated by those who are reluctant to implement gender parity policies are that the market responds negatively to the appointment of women in high positions, that it may complicate the decision-making process, and that women tend to be more risk-adverse than men.

Corporate Governance Code

Particularly with regard to listed companies, a complementary effort to the initiatives described above has been made since May 2006 (before the enactment of the Law on Equality). Specifically, the Spanish National Stock Exchange Commission (“Comisión Nacional de Mercado de Valores”) issued a good governance code (the “Good Governance Code” or the “Code”). This Code sets out recommendations in a variety of areas that listed companies can either follow voluntarily, or explain why they are not following. One of those areas is the function and composition of boards of directors.

Based on the principle that boards of directors should reflect a diversity of knowledge, experience, and gender in order to pursue the social interests of a company, Recommendation 15 of the Good Governance Code focuses on the gender composition of boards of directors. The Good Governance Code sees an increased female presence on boards as an ethical, political, and corporate responsibility challenge, as well as a means for increasing efficiency in companies by not disregarding 51 % of the Spanish population.

Therefore, the Good Governance Code invites listed companies to make an effort in the search for female candidates to cover vacancies on boards. As a consequence of this, there has been a gradual increase in the number of women on the boards of directors of listed companies. According to the Spanish National Stock Exchange Commission,8 in 2011 the number of female directors within Spanish IBEX 35 companies amounted to 61 %, up from 53 % in 2010 (constituting 12.1 % of IBEX 35 companies in 2011).

The Good Governance Code specifically recommends that such female candidates should be nominated to cover vacancies of independent directors as opposed to other types of directors. As a result of this recommendation, the annual report on corporate governance of Spanish IBEX 35 companies issued by the Spanish National Stock Exchange shows that 65.6 % of the women directors are independent, while 27.9 % represent “dominical” directors, who serve on the board as a result of a condition required by a shareholder of the company. Only a mere 3.3 % of women are executive directors.

Likewise, the Good Governance Code recommends that listed companies with a small number of women directors should explain the reasons for this and describe the initiatives undertaken to correct the situation. The Code places particular emphasis on the selection processes. With that in mind, the Law on Securities Exchange9 has, as of March 2011, turned this recommendation into a legal obligation for listed companies by requiring them to provide information in their annual corporate governance reports on the composition of their boards of directors, as well as the degree of compliance with the recommendations of the Good Governance Code.

More recently, on 20 March 2013,10 a Ministerial Order from the Ministry of Economy was passed, which specifically identifies the content and structure of the information to be included in the annual corporate governance reports. Among the content of such information, listed companies must include in their annual reports any effective measures adopted during the year to advance the implementation of the legal mandate for equality between men and women.


The information presented by the Spanish National Stock Exchange Commission shows that the participation of women on boards of directors is still below the 40 % minimum required by the Law on Equality. Although this requirement is not effective until 2015, the 2012 PwC España and Isotés report indicates that, at the current rate, it is unlikely that the minimum threshold of 40 % female presence on boards of directors will be achieved by 2015.11 If that is the case, it is likely that Spanish legislators will re-analyze the situation and take further actions that might include introducing sanctions for noncompliance by companies, similar to those already implemented in other European countries. Although the legal requirement has not yet been achieved in Spain, there has been improvement in gender parity on boards of directors and in companies generally since the enactment of the Law on Equality, although the steps that have been taken proceed at a slow pace. More importantly, companies still have until 2015 to adopt the necessary measures to have a more balanced ratio of women on their boards of directors. This deadline may impact companies’ director selection processes going forward.

  1. Ms. García Guijarro and Ms. Calvo Abril have updated the information contained in previous chapters, initially prepared by former attorneys at Watson, Farley & Williams.
  2. The provision only refers to companies whose assets are higher than Euro 11,400,000; whose net annual income exceeds Euro 22,800,000; and whose average employee number is over 250.
  3. Law 2/2007, of 28 March, on Law on Equality of employment for women.
  4. Law 8/2011, of 23 March, on Law of Equality between women and men and against gender violence.
  5. Data provided based upon the Cesce Report 2013.
  6. Royal Legislative Decree 1/2010, of 2 July, on Law on Capital Companies, states that the report that accompanies the annual accounts shall include information on the gender distribution of the staff of such company, breaking down the categories and levels, which shall include top executives and board members.
  7. The award to be granted in year 2013 has not yet been decided.
  8. Annual report on corporate governance of Spanish IBEX 35 companies issued by the Spanish National Stock Exchange for the year 2011.
  9. Law 24/1988, of 28 July, on Law on Securities Exchange, as amended by Law 2/2011, of 4 March.
  10. Ministerial Order ECC/461/2013, of 20 March, on the content and structure of the annual corporate governance reports, of the annual report on salaries and other means of information of listed companies, the savings banks and other entities that issue securities admitted to trading on official stock markets.
  11. Report Women as Leaders in Spain. PwC España and Isotés. 2012.