Requirements for Gender Composition in Managements have Tightened
Published 9 January 2023
Category: Impact and ESG
On 1 January 2023 new rules have imposed stricter requirements for targets and policies on the gender composition of managements. These rules cover both large Danish companies (covered by accounting class C), including state-owned and some listed companies (covered by accounting class D), as well as certain companies within the financial area, including the following AIFMs and AIFs:
- AIFMS with registered domicile in Denmark, which have (a) financial instruments admitted for trading on a regulated market in either an EU member state or a country which EU has entered into an agreement on the financial area with, or (b) a balance sum of DKK 500 million or more in two consecutive financial years.
- AIFs with registered domicile in Denmark, which have assets with a total value of DKK 500 million or more in two consecutive financial years.
Previously, companies covered by the rules were obliged to have a policy to increase the proportion of the underrepresented gender within “other management levels” of the company. Further, they were obliged to establish a target for the proportion of the underrepresented gender within the top management of the company. Under the new rules, this requirement has been extended to other management levels as well.
As a result, changes have, among others, been made to the Danish AIFM Act, in particular Article 28 regulating the composition of the top management. By extending the abovementioned target-requirement to other management levels, most of the organization in many smaller and mid-sized Danish AIFMs will in practice be included. Following the new rules, it has also been clarified that there is no requirement to establish a target or policy if there is already an equal distribution of women and men. AIFMs shall ensure that the requirements are fulfilled for each AIF. Further, two new subsections have been added. The first one defines what “other management levels” refer to. The other new subsection decides that managements must establish new and higher targets for the proportion of the underrepresented gender when the AIFM or AIF have reached their previous or a new target, when the time frame for the expected fulfillment has expired.
Further, a new subsection has been added to the Danish AIFM Act Article 131. Authorised AIFMs are now obliged to make annual reports to the Danish FSA of information related to the obligation to set targets and prepare policies for the underrepresented gender in managements. AIFMs must make corresponding annual reports for each AIF under management.
The Danish amendment Act can be accessed here. To help companies navigate the rules, the Danish Business Authority has also updated their existing guidance on this.
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