Gender Quotas in Company Management – The new Art. 734f CO
At the beginning of the year the new Art. 734f CO on gender representation on the board of directors and in executive management came into force. The Swiss legislator has set an example with its decision to introduce the provision because gender quotas are to this day a controversial topic.
Since the Swiss Federal Government adopted the draft revision of stock corporation law in November 2016, the revision of the provisions of the Code of Obligations has been in full swing. At the beginning of the year, the standard regarding gender quotas in company management came into force even though gender quotas are still a highly controversial issue. But what exactly is changing and what are the pro and con arguments regarding gender quotas?
Gender benchmarks for the board of directors and executive management
On January 1, 2021 the new Art. 734f of the Swiss Code of Obligations (CO) on gender representation on the board of directors and executive management came into force. The purpose of the norm is to increase the proportion of women on company boards and thus to take account of the constitutional principle of equality. However, the standard only applies to large, listed companies. Other Swiss companies do not need to comply with the new regulation. The provision stipulates that in large, listed companies, each gender must be represented by at least 30 percent on the board of directors and by at least 20 percent in the executive management. If these thresholds are not met, the company concerned must disclose the reasons for this in the compensation report and propose measures to promote the less-represented gender.
Pro arguments
Proponents of gender quotas argue that they help break up outdated structures and bring a breath of fresh air to executive managements. Mixed structures are supposed to guarantee diverse ways of thinking in management and help companies be more successful. Another common argument is that men would always get lucrative positions due to personal relationships and secret machinations behind closed doors. Gender quotas, on the other hand, would prevent such “men’s clubs” and help destroy the glass ceiling.
Con arguments
“We don’t need quota women!” is the slogan of the quota opponents. They argue that members of corporate boards should be hired solely on the basis of their professional qualifications and not because of their gender. Furthermore, the opponents of gender quotas argue that many women have no interest in management positions at all. They argue that if companies are forced to hire people who do not meet the requirements profile in order to fulfill the quotas, the Swiss economy will be harmed.
With the new Art. 734f OR, the Swiss legislator has set an example. Despite its controversial nature, the Swiss Federal Government has decided to introduce gender benchmarks for large, listed companies. The impact of this decision and whether the proponents or opponents will ultimately be proven right will become clear in a few years.
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