The under-representation of women in the highest decision-making bodies of companies in the EU was the trigger for the Women on Boards Directive (Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving gender balance among directors of listed companies and related measures).

The Directive intends to ensure that women and men enjoy equal opportunities as well as a more balanced representation in top management. In view of their economic and social responsibilities and their significant impact on the market, the largest listed companies[1] are now required to introduce measures that ensure a balance between genders.

A bill is currently being drafted in Poland[2] to implement the Women on Boards Directive, which will affect recruitment and hiring policies and HR processes.

Parity?

Listed companies will be subject to gender ratio requirements that will apply to their corporate bodies.

The directive introduces two alternative targets. Persons from an under-represented gender will have to occupy at least:

• 40% of non-executive director positions (essentially supervisory board positions in the Polish situation) or
• 33% of all director positions (executive as well as non-executive directors, therefore basically on management and supervisory boards in the Polish situation).

The proposed Polish legislation sets a target whereby in each corporate body with at least three members, the less represented gender should have a representation of not less than the number closest to 33% (and not more than 49% of all the members of that body).

The regulations do not exclude any specific candidates from applying for director positions, and the decision on suitable candidates is left to the discretion of authorised bodies.

The above target should be met by 30 June 2026, which may be a significant challenge for listed companies, especially given that members of management and supervisory boards have fixed terms of office. Therefore, it is worth taking preparatory steps now to meet these requirements. Particularly if the terms of office of members of any of those bodies are to end still in 2024 or 2025.

Recruitment policy

• Listed companies will be required to introduce a recruitment policy for company bodies. The purpose of the policy will be to ensure a gender balance in positions on company bodies. It will have to be adopted by a resolution of a general meeting of shareholders and specify, in particular, the rules for selecting candidates. In our view, the policy should therefore specify, among other things:
• The stages of recruitment
• Criteria for assessing candidates at each stage
• Rules for transitioning between stages
• The selection board’s composition and rules of procedure.

In particular, the policy may stipulate the need for both genders to participate in recruitment, but also, for example, mentoring programmes or HR strategies aimed at diversifying recruitment. This obligation will come into force, already, on 28 December 2024.

In addition, if listed companies fail to meet the above gender balance target by 30 June 2026, they will have to adapt their existing selection procedures for management and supervisory board candidates. The selection process will have to be based on a comparative assessment of candidates’ qualifications using clear, non-discriminatory, neutrally formulated and unambiguous criteria.

The criteria that listed companies adopt for selecting candidates should imply equal recognition of candidates’ qualifications, knowledge and skills, regardless of gender. Examples of candidate selection criteria that the Directive refers to in its recitals are:

• Professional experience associated with management or supervision
• International experience
• Multi-disciplinarity
• Leadership and communication skills
• Networking skills
• Knowledge of specific areas such as finance, financial supervision or human resources management.

These criteria should be defined before the start of the recruitment and should apply at each stage of the process, thus from preparing recruitment advertisements, through to the initial screening of candidates, right up to the final selection decision.

Therefore, irrespective of the issue of introducing a recruitment policy setting out the selection process for candidates, it is worth reviewing the company’s existing documents on this (including existing resolutions of the general meeting of shareholders and the statutes, if they set out the requirements that candidates must meet) for compliance with the new requirements.

Preference in recruitment

The new regulations will introduce the preference principle in Poland (namely the principle of preference for a candidate from an under-represented gender in a choice between candidates with equal qualifications). However, this will only apply if the company does not meet the 33% parity target.

As a rule, candidates for positions on company bodies are selected on a comparative assessment of each candidate’s qualifications – with the proviso that in the above situation:

• If during selection a choice is being made between candidates with equal qualifications (such as suitability, competence and job performance), preference is given to the candidate from the under-represented gender.
• This precedence should not imply an automatic and unconditional preference. Indeed, the choice of a candidate of the opposite sex may be supported by other diversity rules laid down by law or in the company’s recruitment policy, based on non-discriminatory criteria. An example of ignoring such preference could be due to broader diversity policies applying in the company (such as taking into account disability or other aspects that affect the working environment’s diversity).

Documenting the decision-making process

The selection process that listed companies follow in recruiting candidates for management or supervisory board positions should be properly documented. This is necessary mainly because listed companies must provide information to the applicant candidate about the decision-making process during the recruitment. This will also be needed in any possible claims from candidates or in administrative proceedings before the Polish Financial Supervision Authority.

Candidates will be able to request the following information:

• Evaluation criteria that formed the basis for the selection
• Comparative assessment of the candidates and its justification
• Reasons for departing from the preference principle, if applicable. 

Furthermore, in any dispute, the rejected candidate from the under-represented gender will only have to substantiate that he or she has qualifications that are equal to those of the candidate selected in the recruitment. It will then be the responsibility of the listed company to prove the propriety of the selection made during the recruitment.

A person in relation to whom a company has breached applicable selection requirements, including the preference principle, will be entitled, in accordance with the plans for the bill, to compensation equal to at least the minimum wage.

In addition, a breach of the obligations, including those described in this article, may be liable to a fine from PFSA of up to 10% of the total annual revenue declared in the last audited financial statements for the financial year.

Summary

The final wording of the Polish regulations is not yet certain, because work is still taking place on the draft bill. A number of comments were made on the draft during public consultations, which are presented more extensively in the article Czas na zmiany w dużych spółkach giełdowych – dyrektywa Women on Boards. Nevertheless, what is clear at this point, is that listed companies will have to have a recruitment policy in place by 28 December 2024 and reach the parity target by 30 June 2026, and if they fail to reach this target by the deadline, they will have to apply the preference principle and a special selection process for candidates.

Joanna Dudek

Nina Bronisz

[1] Listed companies with registered offices in EU Member States and at least 250 employees and an annual turnover exceeding the equivalent of EUR 50 million or with an annual balance sheet total exceeding the equivalent of EUR 43 million.

[2] Draft Act amending the Act on Public Offerings and the Conditions for Introducing Financial Instruments into Organised Trading and on Public Companies and the Act on the Implementation of Certain Provisions of the European Union on Equal Treatment; draft bill of 5 September 2024, UC63