Equal representation and gender balance in companies

The Organic Law 2/2024 of 1 August on equal representation and balanced presence of women and men (hereinafter “LO 2/2024”) has been enacted with the aim of improving gender balance in various areas, including gender representation among directors of listed companies.

LO 2/2024 transposes Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 into Spanish law, defining equal representation as a situation in which neither sex exceeds 60% nor is less than 40% in each area, except in cases where female representation exceeds 60%, always in line with the principle of affirmative action.

Regarding the corporate sphere, LO 2/2024 establishes specific requirements for listed companies and public interest entities, when they meet certain requirements, such as having an average of more than 250 workers or exceeding 50 million euros in annual turnover.

The main obligations imposed by the law include:

• Composition of the Board of Directors by at least 40% of the under-represented sex.
• Adjustment of selection processes to ensure that representation targets are met.
• Transparency in selection with the option for candidates to request information on the criteria and decisions taken.
• Obligations for senior management to have a minimum of 40% representation of the under-represented sex in senior management, with explanation of reasons in case of disparity.
• Annual reports on gender representation on the board of directors, submitting this information to the CNMV for listed companies.

Failure to comply with these obligations will be considered a serious infringement, as established in article 292 of the Securities Market and Investment Services Act.

As regards implementation deadlines, the law foresees a gradual timetable. For the 35 listed companies with the largest market capitalisation, the deadline is 30 June 2026, while for the remaining listed companies it will be 30 June 2027. Public interest entities will have differentiated deadlines, reaching 40% representation by June 2029.