Rules regarding gender balance within boards of Public Limited Companies

The Government has decided that the rules regarding gender representation in public limited companies shall be implemented as of January 1, 2006. Public limited companies registered before this time is given 2 years to comply with the requirements of sex representation. All new companies must follow the rules in order to be registered.

The Government has decided that Norway being the first country in the world

has demanded gender balance within the boards of public limited companies. This is important for the Norwegian economy. We take seriously that half the competence that companies need to maintain position in international competition is found among women, according to the Minister of Children and Equality, Karita Bekkemellem.

The Parliament passed a law in December 2003 with reference to Ot.prp. nr.97 (2002-2003), stating that privately owned public limited companies will be given rules to elect a board where there should be a minimum number of both sexes in the board, approximately 40 percent. This rule was to be implemented if public companies did not comply within two years. By July 2005, only 68 of 519 companies fulfilled the requirements of the rules. 16 per cent of the board members were women.

During spring 2006, the Government will propose an amendment to the law. The amendment will give the Government legal authority to take action to prevent dissolution if substantial social considerations so requires. This will be a general rule, applying not only for the rules on gender representation, but for all the rules regarding the composition of the company boards.

We expect that companies will fulfil the requirements of the law and that problems relating to forced dissolutions is of a theoretical matter. As some concern has been expressed concerning the sanction system, we find it appropriate to give the Government an escape route. The escape will be a rule which provides access to prevent forced dissolution while waiting for irregularities concerning the Board, Management and accountant to be corrected.

In this connection we will consider whether or not to give a compulsory fine in anticipation of the conditions to be remedied. The rule will be a tool for the Government under very special circumstances and does not imply access to dispensations or acceptance possibilities for the companies according to the Minister of Justice, Knut Storberget.