Mandatory Implementation of Female Director Quotas from 2026... 40% Non-Executive, 33% Overall Female Share
Amendment to Capital Market Act Requiring 'At Least One Female Registered Director' Enforced in Korea Since August
[Asia Economy Reporter Kim Sung-wook] From 2026, the 'female director quota system' for listed companies within the European Union (EU) will be mandatory. On the 22nd (local time), the European Parliament announced the official adoption of the law related to gender balance on corporate boards. This comes more than 10 years after the EU Commission first proposed the female director quota system in November 2012.
According to the new law, all listed companies within the EU must guarantee women hold 40% of non-executive director positions and 33% of the entire board by June 30, 2026. Companies are required to report board gender ratio information to authorities regularly every year. Penalties such as fines or public disclosure of names will be imposed if the mandatory ratios are not met. However, companies with fewer than 250 employees are exempt from mandatory implementation.
Ursula von der Leyen, President of the EU Commission, along with Vice-President Vera Jourov? and Equality Commissioner Helena Dalli, emphasized in a joint statement, "Since the Commission first proposed this 10 years ago, a law has been created that can break the glass ceiling on boards of listed companies." She added, "This is a long-awaited moment and an important breakthrough for gender equality that should be celebrated."
The average proportion of female directors in EU listed companies is about 30%. As of October last year, countries like France (45.3%) and Germany (34.1%) exceed the average, but when averaging countries with low ratios such as Cyprus (8%), the overall average is about 16.6%. These countries are expected to see significant changes in their corporate board compositions due to this measure.
Last Year, Female Director Ratio in Domestic Listed Companies at 8.7%
The proportion of female directors in domestic listed companies was 8.7% last year, which is lower compared to the United States (29.7%), China (13.8%), and Japan (12.6%). In 2020, the female director quota system was brought into public discussion with the intention of including diverse values, including gender, in corporate decision-making. Accordingly, the Capital Markets Act was amended to require listed companies with assets over 2 trillion KRW to have at least one female executive director.
The amendment to the Capital Markets Act was implemented from August after a two-year grace period. According to CEO Score, a corporate data research institute, the proportion of female outside directors among 2,212 listed companies increased from 5.6% at the end of last year to 7.5% in April this year. In particular, the proportion of female outside directors in listed companies with assets over 2 trillion KRW rose from 13.3% to 20.9% during the same period. However, this impact has not extended to inside director composition, and it is known that 91.8% of large companies with assets under 2 trillion KRW have no female outside directors at all.
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