EUROPE’S LISTED companies will be forced to reserve at least 40 per cent of their non-executive director board seats for women by 2020 or face fines and other sanctions under a proposal being drafted by the European Commission.

The legislation, a copy of which was obtained by the Financial Times, is aimed at what EU officials believe is a severe gender imbalance across the bloc’s 27 member states. EU data shows that, in January, women represented only 13.7 per cent of board positions in large listed companies.

Although several EU countries – including France, Italy, Spain and the Netherlands – have already adopted their own national quotas, such hard limits have run into fierce resistance from Britain and Sweden, which currently have no limits.

An official in the UK’s business department said the government had yet to see the commission’s proposal, but added: “Our position will still stand – we are opposed to legislation for quotas.”

The proposal, expected to be formally introduced next month by Viviane Reding, the EU’s justice commissioner, can be adopted by the EU through its complex majority voting process, meaning neither the UK nor Sweden would be able to veto its passage.

According to the draft, companies larger than 250 employees or with more than €50 million in revenues would be required to report annually on the gender make-up of their boards. Those missing the mandatory quota would be subject to administrative fines or be barred from state aid and contracts. Ms Reding has decided to push the legislation after a voluntary scheme failed to improve gender balance among top management. – (Copyright The Financial Times Limited 2012)