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The government is proposing that medium-sized and large companies should have at least 40 per cent gender balance on their boards. The rules will be introduced gradually and from next year. The requirement will cover around 20,000 companies. Norway is the first country in the world to take this step. The proposal has been drawn up in close co-operation with NHO and LO..
Background to the new rules
Norway has long been a driving force for gender equality and diversity, and from 1 January 2006 rules were introduced requiring both genders to be represented in public limited companies. Since then, the number of Norwegian boards with both genders represented has increased. The agreement on proposals for gender balance on Norwegian boards is the result of thorough discussions and negotiations between political parties, the Confederation of Norwegian Enterprise (NHO) and the Confederation of Norwegian Trade Unions (LO), which have joined forces to strengthen gender equality efforts in Norway.
The bill
The proposal is to introduce requirements for gender balance on the boards of Norwegian companies of a certain size. It is proposed that companies with more than three board members may have a maximum of between 67 and 50 per cent of board members of the same gender (depending on the number of board members). Separate requirements are proposed for the gender composition of deputy board members, and for board and deputy board members elected by and among the employees.
Which companies are covered by the rules
In the long term, the proposed legislation will entail requirements for the composition of the boards of the following companies:
- Those who have such requirements under the regulations today.
- Limited companies, co-operatives or housing associations that either have more than NOK 50 million in total operating and financial income, or more than 30 employees. The same applies to general partnerships that only have legal entities as participants.
- Co-operatives or housing associations with more than 500 members/shareholders.
- Foundations that are commercial organisations or whose purpose is to distribute funds, or where a public authority elects at least one board member.
Phased introduction of the rules
Where there are requirements for the composition of the board of directors today, the rules enter into force without transitional rules. For others, the following deadlines apply to fulfil the rules:
- No later than 31 December 2024: Companies with more than MNOK 100 in total operating and financial income.
- No later than 30 June 2025: Companies with more than 50 employees, co-operatives and housing associations with more than 500 members or unit holders and foundations that are commercial or have distribution as their purpose, or where a public authority elects at least one board member.
- No later than 30 June 2026: Enterprises with more than 30 employees.
- No later than 30 June 2027: Organisations with more than NOK 70 million in total operating and financial income.
- No later than 30 June 2028: Companies with more than MNOK 50 in total operating and financial income.
Nearly 13,000 new board representatives needed
The new rules will mean that several companies will have to make changes to the composition of their boards. The scope of this work will vary between companies, for example depending on whether they regularly review the composition of the board and change the board, what expertise they need and what their network is like.
The Ministry of Trade and Industry's calculations show that there will be a need to recruit almost 13,000 new board representatives up to 2028. When the first stage is introduced next year, there will be a need for around 6,600 new board representatives, most of them women.
WHAT SHOULD YOU DO NOW?
Start by checking whether your organisation is covered by the new rules. If you are covered by the new rules, a good tip is to start searching for suitable and competent board members and recruit them as early as possible. The most competent will be the first to go.
Law firm Halvorsen & Co AS has a number of skilled and knowledgeable employees who can assist the companies that will be covered by the proposed legislative change.
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