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Leadership Positions Act II: Women's Quota also for Board Members and the Right to Take Time Off

The Second Leadership Positions Act (Führungspositionengesetz, "FüPoG II") came into force on August 12, 2021. It represents a further development of the FüPoG which came into force in 2015: The women's quota introduced at that time for supervisory boards of listed companies and companies with equal co-determination is extended to the management boards of these companies.

Minimum participation for management boards above a certain size

If the management board of a listed stock corporation subject to the Co-Determination Act, i.e. with more than 2,000 employees, consists of more than three persons, in future at least one woman and at least one man must be a member of the management board in accordance with Section 76 (3a) Sentence 1 of the German Stock Corporation Act (AktG). This minimum participation requirement must be complied with from August 1, 2022 when appointing new executive board members. If a new executive board member is appointed after this date in disregard of the participation requirement, the appointment will be void in accordance with Section 76 (3a) Sentence 2 AktG. The management board position then remains vacant; in urgent cases a judicial appointment can be made on application, even then taking into account the minimum participation requirement. The same applies to the dualistic (Section 16 (2) SEAG) and the monistic (Section 40 (1a) SEAG) SE.

Target figures for supervisory board, management board and other management levels

The regulations on the so-called flexible quota have also been supplemented: Pursuant to Section 111 (5) AktG, the supervisory board of stock corporations which are listed and/or subject to co-determination must set targets for the proportion of women on the supervisory board and the management board. Pursuant to Section 76 (4) AktG, the management board of these companies is subject to the same obligation with regard to the two management levels below the management board. If a target of zero is set, the supervisory board or management board must in future provide clear and comprehensible reasons for this decision, explaining the considerations on which the decision is based. According to the German government's explanatory memorandum, the statement of reasons must show which circumstances the management board has taken into account and how it has weighted them. It must be sufficiently detailed to "make a conscientious decision plausible to the public", whereby a statement of reasons of 100 to 150 words should normally suffice.

For limited liability companies ("GmbHs") subject to co-determination (under the Co-Determination Act or the One-Third Participation Act), corresponding obligations apply, which are governed by Section 36 of the German Limited Liability Companies Act (GmbHG) and Section 52 (2) GmbHG.

Extended reporting obligation

The obligation to justify the zero target figure is flanked by an extended reporting obligation under commercial law. Pursuant to Section 289f (2) No. 4, (4) Sentence 1 of the German Commercial Code (HGB), the following information must be included in the corporate governance statement, which is part of the management report:

  • the target figures for the proportion of women and the deadlines for achieving them,
  • the reasons for the target figures
  • whether the targets set have been achieved during the reference period, and
  • if the targets have not been achieved, information on the reasons.

This reporting requirement is subject to a fine pursuant to Section 334 (1) Sentence 1 nos. 3, 3a and 4 in conjunction with sentence 2 and 3 HGB.

#stayonboard: Possibility of time-out for Executive Board members

With the FüPoG II, the legislator has at the same time implemented the demand of the #stayonboard initiative: In the future, members of an executive board consisting of several persons will have the option of taking time off for maternity leave, parental leave, caring for a family member or illness without having to resign from office or incurring liability risks. Under Section 84 (3) AktG, a member of the executive board has the right in such cases to request the supervisory board to revoke the executive board appointment. The supervisory board must revoke the appointment and, in doing so, assure reappointment after the end of the time-out period. In the event of maternity leave, the duration of the time-out shall be based on the periods specified in Section 3 (1) and (2) of the German Maternity Protection Act (MuSchG). In the case of parental leave, care of a family member or illness, the supervisory board must approve the time off for a period of up to three months; however, a period of up to twelve months is possible if a corresponding agreement has been made. In the case of parental leave, care of a family member or illness, the supervisory board may refuse the time off for good cause; in the case of maternity leave, the supervisory board must approve the time off.

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