The Dutch Diversity Act and the Approaching Reporting Deadline

The Dutch Act on gender diversity in boardrooms of Dutch companies (the Diversity Act¹) introduces measures to improve gender equality on the management board, supervisory board and the sub-top management of Dutch companies. They include an obligation to report on targets and progress to the SER (Sociaal Economische Raad). The first reporting deadline is 31 October 2023. As this deadline approaches, we hereby remind you of the statutory obligations under the Diversity Act.

The Diversity Act entered into force on 1 January 2022 and imposes two measures to improve diversity in the boardrooms of Dutch companies. The first is an appointment quota for supervisory boards of companies listed on a Dutch regulated market, to help ensure that men and women each hold at least one-third of the seats on the supervisory board. This quota applies to appointments of supervisory board members effective 1 January 2022, with a few exceptions, for example, in case of a reappointment. A supervisory board member appointment that does not contribute to achieving the quota is void, but it does not affect the validity of supervisory board resolutions (even if the new member has participated in the decision-making process).

The second measure applies to “large companies”, which are defined as public and private limited companies (NVs and BVs) having at least two out of three of the following characteristics in at least two consecutive financial years:

1. value of assets worth more than EUR 20 million according to the balance sheet
2. a net turnover of more than EUR 40 million in a financial year
3. an average number of employees of 250 or more in a financial year.

Under the Diversity Act, these large companies are required to set appropriate and ambitious target figures (streefcijfers) to improve gender diversity on their management boards, supervisory boards and in their sub-top management (categories of employees in managerial positions to be determined by the company). In this context, "appropriate” means that the target depends on the size of the boards and sub-top management, the industry in which the company operates and the existing male-female ratio within the company. ”Ambitious” means that the target must reflect a more balanced male-female ratio. For example, for a management board with no women, the target must be the appointment of at least one woman. If a woman has been appointed and that target has been reached, but there is still room for a more balanced proportion (for example on a board of four or five persons), the company will have to set a target figure again that is appropriate and ambitious.

In order to achieve the set targets, large companies must draw up a plan of action (plan van aanpak). In addition, they must report the number of men and women in top-management and sub-top management positions, report the target figures, submit a plan to reach the target figures and, if one or more plans have not been realized, provide the reasons. A large company must include that information in its annual report and must also provide a separate report to SER. The latter must be submitted via the SER diversity portal within ten months of the company's fiscal year, for years starting on or after 1 January 2022. This means that large companies have until 31 October 2023 to submit their report for fiscal year 2022, unless their fiscal year did not end on 31 December 2022. Companies whose fiscal year does not coincide with the calendar year may indicate the end date of their fiscal year in the intake. This must also be done before 31 October 2023. Companies that fall under the scope of the Diversity Act are therefore required to act soon, if they have not already done so. The SER will monitor this and publish the reported data via a web portal, allowing other companies and the public an insight into the efforts that companies are making.

If you have any questions with regard to the above, please do not hesitate to contact us.

-----------------------------------

¹ In Dutch 'Diversiteitswet'