Five myths about the quota for women on German management boards

Germany

Zweites Führungspositionen-Gesetz (FüpoG II), the German law passed early in 2021 requiring large 'listed' companies to ensure that their management boards include at least one woman, has furthered the cause of gender equality on corporate boards in Germany, but has also proved polarising as heated debate and false information about the legislation circulate.

With misconceptions rampant on the requirements and intent of FüpoG II, this article dispels the five most prominent myths surrounding the legislation. 

Myth 1: The quota for women on the management board applies to all medium-sized and large companies

False! The quota only applies to companies that are listed on the stock exchange and are subject to codetermination. Currently, this only encompasses 66 companies, of which only 24 do not now have a woman on their management boards.

Myth 2: The "target figure of zero" for the proportion of women on boards, which a majority of companies have opted for, will be prohibited.

False. Target zero, about which Angela Merkel says she has "zero understanding" or tolerance, is not prohibited. It is only subject to justification. A fine can be imposed in the event of a failure to provide appropriate justification.

Myth 3: The 'fixed quota' for women on management boards has resulted in a women's quota of 30%, such as on supervisory boards

False! The fixed quota for women on management boards means that if a given board consists of more than three members, in the future one of these members must be a woman. This applies regardless of whether the board consists of four people or ten people since in each case (i.e. a board made of four members or a board made up of ten), the law requires that only one member be female. As a result, the actual percentage for women on boards will usually be lower than 30%.

Myth 4: Male board members must vacate their posts due to the fixed quota for management boards

False! This fixed quota only applies to new board appointments (i.e. for the next terms of office of board members).

Myth 5: The proportion of women on management boards increased during the COVID-19 crisis and the subsequent rise of digital companies

False! The proportion of women on management boards has been declining since the beginning of the pandemic. According to the Albright Foundation, the share of women within the ten ex-start ups founded over the past 15 years and now represented in one of the DAX family indices is only 5.4% and has been attributed to homosocial reproduction and unconscious investor bias.

This article is part of our "Five Myths" series on environmental, social and governance (ESG), sustainability and corporate social responsibility (CSR) in which our experts address the untruths and clichés that you encounter as a legal practitioner in the areas such as labour law or compliance.

For more information on FüpoG II and legal advice to achieve a sustainable business, contact your CMS client partner or CMS experts: