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Gender Quota for Boards of Corporations in Spain

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Abstract

This article describes the limited success of the corporate governance self-regulation system aimed at achieving a balanced presence of women and men on the boards of listed companies. To provide empirical evidence, an analysis of the representation of female directors in Spain is presented. This study also aims to examine the effects of the recommendations on gender diversity contained in the Spanish Good Corporate Governance Code and in the Effective Equality Act 2007. The results show the scant presence of women on Spanish boards until 2013, but reports of 2013 reveal changes in that respect, and statistically significant differences can be observed compared with previous years, probably due to the amendment of the Companies Act 2010. However, the draft EU Directive on improving the gender balance seems to be the only way to reach effective gender equality.

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Notes

  1. Article 1 of the Effective Equality Act reads as follows: ‘Purpose of the Act. 1. Women and men are equal in human dignity, equal in rights and duties. The purpose of this Act is to ensure equal treatment and opportunities for women and men, in particular via the elimination of discrimination against women of whatsoever circumstances or background and in all areas of life, specifically in the political, civil, occupational, economic, social and cultural domains, so as to build a more democratic, fair and solidary society, pursuant to Articles 9.2 and 14 of the Constitution. 2. To this end, the Act establishes the principles governing the action of public authorities, regulates natural and corporate persons’ public and private rights and duties and lays down measures designed to eliminate and correct all forms of discrimination on the grounds of sex in the public and private sectors.’ (© Spanish Ministry of Justice).

  2. Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast), OJ L 204, 26 July 2006.

  3. Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment of men and women in the access to and supply of goods and services, OJ L 373, 21 December 2004.

  4. Preamble to Act 3/2007, Part II.

  5. See additional provision one of the Effective Equality Act of 2007.

  6. Section 35 Act 2/2001 of 4 March on sustainable economy.

  7. This Act is in line with the legislative initiatives at international level and non-binding regulations in Spain. (Dodd-Frank Act 2010, EU Green Book on Corporate Governance). See PWC, Report on boards of directors of listed companies (2012), http://www.pwc.es (last visited 20 September 2012).

  8. Ensa, Annual Report 2011, http://www.ensa.es (last visited 5 March 2015). On the other hand, on the board of directors of the public RTVE Corporation there are 3 women and 6 men (http://www.rtve.es (last visited 5 March 2015) despite the fact that in 2012 its Regulatory Act was amended (Official Journal of 23 April 2012). Now its Section 10.1 lays down the following: ‘The board of directors of the RTVE Corporation will be composed of nine members, all of whom will be individuals with enough training and professional experience, with the aim to obtain equality between men and women in its composition.’ The State Company for Mail and Telegraphs has 6 women and 10 men on its board (4 women and 12 men in 2012) Sociedad Estatal de Correos y Telégrafos S.A., Informe Anual de Gobierno Corporativo (2012), at pp. 8–9, http://www.correos.es (last visited 5 March 2015). The board of the parent company of the state holding SEPI consists of 5 women and 12 men, http://www.sepi.es (last visited 5 March 2015).

  9. IBEX 35 (acronym of ‘Índice Bursátil Español’, the Spanish stock exchange index), is a capitalisation-weighted index comprising the 35 most liquid Spanish shares traded in the continuous market (SIBE).

  10. Gender equality in the Spanish Government was achieved in 2004, under the Socialist Party, see Novo Vázquez (2011).

  11. The Act refers to this recommendation (Section 75) only for companies that can prepare abridged income statements (i.e., medium-sized or small companies). Section 258 of the Companies Act 2010 allows corporations to draw up abridged income statements if they meet at least two of the circumstances listed below regarding the closing date of two consecutive financial years: (i) total assets not over eleven million four hundred thousand euros, (ii) net annual turnover not over twenty-two million eight hundred thousand euros, and (iii) average headcount during the financial year not over two hundred and fifty employees.

  12. Royal Decree 1615/2009 of 26 October regulates the obtaining and use of the ‘Equality at the Company’ mark. The mark is awarded on an annual basis and is in force for three years, though the awarded companies must submit an annual report to be assessed by the Directorate-General for Equal Opportunities of the Secretariat of State of the Ministry of Health, Social Services and Equality in order to prove that they maintain the level of excellence in equality issues for which they were awarded the mark. In 2011, several companies listed on the IBEX 35 obtained the mark (BBVA, Acciona, FCC, Indra) (see Ministerial Order SSI/499/2012 of 24 February, Official Journal 03/13/2011). In 2010, the mark was awarded to Banco Popular, Banco de Santander, Enagás, Endesa, Ferrovial, REE and Repsol (see Ministerial Order SPI/3138/2010 of 26 November, Official Journal 12/03/2010).

  13. The Ministry of Labour and Social Affairs monitors the companies awarded the mark to ensure they implement equal treatment and opportunities policies regarding their workers on an ongoing basis, withdrawing the mark from non-compliant organisations (Article 50.5, Organic Act 2007).

  14. Conde-Ruiz and Hoya (2015), at p. 2. Weighing up the arguments for and against, Szydlo (2015), at pp. 101–104.

  15. Royal Legislative Decree 1/2010 of 2 July approving the consolidated text of the Companies Act, Official Journal 3 July 2010.

  16. Council Regulation (EC) 2157/2001 of 8 October 2001 on the Statute for a European company (SE).

  17. See Articles 455 to 494, Companies Act 2010.

  18. Law 24/1988 of 27 July on the securities market.

  19. Section 540, paragraph 4, letter g), Companies Act.

  20. Committee on the Financial Aspects of Corporate Governance and Gee and Co. Ltd, Report of the Committee on the Financial Aspects of Corporate Governance (1992), http://www.ecgi.org/codes/code.php?code_id=13 (last visited 15 June 2012).

  21. Círculo de Empresarios, Una propuesta de normas para un mejor funcionamiento de los Consejos de Administración [A proposal for regulations for a better functioning of boards of directors] (1996), http://www.ecgi.org/codes/documents/empres.pdf (last visited 15 June 2010).

  22. On 28 February 1997, the Spanish Cabinet, at the proposal of the Second Vice-President of the Government and Minister of Economy and Finance, resolved to create a Special Commission to consider a code of ethics for companies’ boards of directors. By means of a Ministerial Order, dated 24 March 1997, in compliance with the Cabinet’s decision, the Second Vice-President of the Government and Minister of Economy and Finance appointed the members of the Special Commission, chaired by Manuel Olivencia. The final report (‘The governance of listed companies’) is dated 26 February 1998, http://www.ecgi.org/codes/code.php?code_id=110 (last visited Jan 15, 2011).

  23. Report of the Special Commission to foster transparency and security in the markets and in listed companies, dated 8 January 2003, chaired by Enrique de Aldama y Miñón. On 19 June 2002, the Spanish Cabinet adopted a resolution establishing a Special Commission ‘to study the criteria and guidelines that should apply to companies which issue securities and instruments admitted to listing on organised markets in their relations with consultants, financial analysts and other companies, persons or entities which assist them or provide professional services to them, and those which should apply among the latter, in order to increase transparency and security of the financial markets in the light of the structural changes, the current globalised economy and the trends in international markets. The Commission must also analyse the current status and degree of application of the Code of Good Governance for Listed Companies.’

  24. Section one f) of Order ECO/3722/2003 of 26 December calls on the CNMV to publish ‘a single text with existing corporate governance recommendations’ for listed companies to use as a benchmark when reporting their compliance or otherwise with corporate governance recommendations in their annual corporate governance report, as mandated by the Securities Market Act (Law 31/2014 repealed the regime of the Securities Market Act on Annual Corporate Governance Reports of Listed Companies). In the Government Agreement of 25 July 2005, creating the Special Working Group, the Government orders the Working Group to take into account other recommendations made by the European Commission and international organisations (such as the OECD).

  25. In June 2013, the CNMV published an updated version of the Conthe Code, which showed no progress on gender diversity on corporate boards. The Unified Good Governance Code, the Appendix and other related documents are available at the CNMV web site: http://www.cnmv.es/portal/Legislacion/COBG/COBG.aspx (last visited 1 November 2013).

  26. Unified Good Governance Code (draft) (2006), at p. 12, http://www.ecgi.org/codes/documents/unified_code_jan06_en.pdf (last visited 21 May 2014).

  27. Ibid, at p. 13.

  28. Under the Title ‘Gender Diversity’, the introduction to Recommendation 15 reads as follows: ‘A good gender mix on boards of directors is not just an ethical-political or “corporate social responsibility” question; it is also an efficiency objective which listed companies might wish to work towards in the mid term at least. Neglecting the potential business talent of 51 % of the population—women—cannot be an economically rational conduct for our country’s leading corporate names. This is amply borne out by the experience of the last few decades which have seen women occupying a growing place in the business world. But more effort is required for this presence to extend into the senior executive and directorship spheres. With this in mind, the Code calls on listed companies with few women on their boards to actively seek out female candidates whenever a board vacancy needs to be filled, especially for independent directorships.’

  29. This obligation currently appears in Article 260.8 of the Companies Act, but without the reference included in the draft Unified Code to the changes occurring in the gender distribution of company staff over the course of the year.

  30. Unified Good Governance Code, at p. 7.

  31. Official Journal of 14 January, 2008. This Circular was repealed by Circular 5/2013 of 12 June. Listed companies shall prepare their annual reports in 2014 according to the Annexes of this Circular.

  32. See Preamble to Circular 4/2007.

  33. CNMV, Informe de Gobierno Corporativo de las entidades emisoras de valores admitidos a negociación en mercados secundarios oficiales, IAGC, 2011, at p. 87.

  34. In its Corporate Governance Annual Report 2011, Endesa acknowledged that it had no female directors: ‘However, Endesa does have an Equality Plan in place, reasserting its commitment to ensuring compliance with the gender equality principle.’ Article 15 of the Endesa Board of Directors’ Regulations stipulates: ‘The Appointments and Remuneration Committee will be entrusted with, among other functions, the functions of reporting and proposing the appointment of the members of the Board of Directors, whether in the event of co-optation or for proposal to the General Shareholders’ Meeting guaranteeing that the selection procedures do not suffer from implicit flaws which impair the selection of female Directors’ (Endesa Corporate Governance Annual Report 2011, at p. 20). It is doubtful that this company (like the other two companies mentioned earlier) actively pursues a policy encouraging the presence of woman on the board of directors. It is highly unlikely that, currently, there are no women who meet the professional profile enabling them to carry out the duties as members of the board in these companies, at least, as independent members of the board. More briefly, Gas Natural only ticks the ‘yes’ box to question B.1.27 (‘In particular, indicate whether or not the Appointments and Remuneration Committee has laid down procedures to ensure that the selection processes are not subject to implicit bias that prevents the selection of female Directors and deliberately look for female candidates with the required profile.’). In relation to the main procedures it only says that ‘Article 31.2 of the Regulations of the Board of Directors lays down the Appointments and Remuneration Committee obligation’s to ensure that “[…] when covering new vacancies, selection processes shall apply that are not subject to implicit bias that prevents the selection of female Directors, where the potential candidates shall include, under the same conditions, women that meet the professional profile being sought” ’ (Gas Natural Fenosa, Annual Corporate Governance Report 2011, at p. 26). And even more briefly, Técnicas Reunidas’ answer to question B.1.27 in its ACGR 2011 is: ‘In the selection process of new members of the boards, the company follows procedures that are not subject to implicit bias that hampers the selection of female Directors’ (Técnicas Reunidas, Annual Corporate Governance Report 2011, at p. 27).

  35. This Circular details Ministerial Order ECC/461/2013, dated 20 March, which lays down the content and structure of the Corporate Governance Annual Report, the Annual Report on Remunerations, and other information instruments of listed companies, savings banks and other bodies that issue securities in official securities markets. The Circular requires that a comparative chart be filled in showing the number of women members of the board over the last four years, as well as their position: executive, independent or external director. The Corporate Governance Annual Report 2014 must be completed on the basis of this Circular.

  36. Banco de Santander S.A., Annual Corporate Governance Report 2013, at p. 20.

  37. Ibid.

  38. In 2011, 91.4 % of the IBEX 35 companies had at least one woman on the board, an increase of 8.5 percentage points compared to the previous year. This is in line with the upward trend observed since 2007. In addition, the number of women board members rose by 15.1 % in 2010, accounting for 12.1 % of the board members of listed companies, compared with 10.6 % in the previous year. This percentage brings Spain very close to the United Kingdom (13 %), and close to the then EU-16 (14 %) and the United States (16 %). See PWC, Report on boards of directors of listed companies, June 2012, at p. 38, http://www.pwc.es (last visited 20 September 2012).

  39. Grupo Inforpress, Centro Internacional Trabajo y Familia (ICWF) (2014), at p. 5.

  40. CNMV, Quarterly Report III (2012), at pp. 134, 143, http://www.cnmv.es/portal/Publicaciones/BoletinCNMV.aspx (last visited 5 November 2013).

  41. CNMV, Quarterly Report I (2013), at p. 123, http://www.cnmv.es/portal/Publicaciones/BoletinCNMV.aspx (last visited 16 November 2013).

  42. Grupo Inforpress, Centro Internacional Trabajo y Familia (ICWF) (2014), at p. 21.

  43. Ibid, at p. 22.

  44. See Bilimoria (2000), at pp. 25–40.

  45. Miller and Triana (2009), at pp. 755–786. See also Nielsen and Huse (2010), at, pp. 136–148.

  46. Department for Business, Innovation & Skills (2011) Women on boards, at p. 7, https://www.gov.uk/government/publications/women-on-boards-review (last visited 8 April 2015).

  47. Observatorio de Responsabilidad Social Corporativa, La Responsabilidad Social Corporativa en las memorias anuales de las empresas del IBEX 35. Análisis del ejercicio 2012 (released in 2014), at p. 42.

  48. It is important to note that no company obtains a score equal or higher than the average (2 points), which means that the information provided by the IBEX 35 is of low quality as regards CSR.

  49. CNMV, Informe de Gobierno Corporativo de las entidades emisoras de valores admitidos a negociación en mercados secundarios oficiales, IAGC, 2011, at p. 87.

  50. Ibid, at pp. 106-7.

  51. Ibid, at p. 30.

  52. As stated by the CNMV in Informe de Gobierno Corporativo de las entidades emisoras de valores admitidos a negociación en mercados secundarios oficiales, IAGC, 2010, at p. 38.

  53. CNMV, Informe de Gobierno Corporativo de las entidades emisoras de valores admitidos a negociación en mercados secundarios oficiales, IAGC, 2011, at p. 29.

  54. Ibid, at p. 30.

  55. Alonso Ureba interprets this as there being an intention to reform the structural or organic regime of listed companies, without considering our system of sources. From a legitimate perspective, the work of the commissions referred to in these codes should constitute the basis for regulations proposed by the General Commission of Codification, which, after a public information process, should be submitted to Parliament as a bill (Alonso Ureba (1999), at p. 101).

  56. The reasoning can be summarised as follows: in a situation of crisis, possible failures are detected in how the board of directors works with empirical analysis that uses, mostly, economic techniques. For example, it is considered that different studies show the appropriateness of taking into account independent members on the board representing the reference or control shareholders (that are represented directly or indirectly on the board) and executive board members. Thus, as it seems excessive to make the presence of these board members mandatory by law (this might be contrary to the right of association in Art. 22 of the Spanish Constitution 1978), the Spanish corporate governance codes recommend their presence on the board.

  57. This concept comes from economic science and is gaining momentum due to the debate on corporate social responsibility.

  58. These ideas were put forward brilliantly by Fernández de la Gándara (1999), at p. 73: ‘[T]he zealots of corporate governance are convinced, (…), about the fact that implementing a new company behaviour code will increase the financial value of the company and its position in the market.’

  59. ‘Every company must have its ideas, its philosophy, its beliefs and values, and transform them into commitments and the draftsman should not intervene’, Masifern (1997), at p. 291.

  60. Fernández de la Gándara ( 1999 ). at p. 71.

  61. The agreement of the Cabinet Meeting on 28 February 1997 whereby a special commission was set up to study an ethical code for the board of directors of listed companies stipulates that ‘in spite of the voluntary character for the governing bodies of listed companies to adhere to the ethical code, the CNMV will be entitled to ask listed companies for information about whether the said ethical code has been adopted or not’.

  62. In this sense, the background of the Proposal for a Directive of the European Parliament and of the Council on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures (COM/2012/0614 final) is as follows: ‘Member States and the EU institutions have undertaken numerous efforts in the course of several decades to promote gender equality in economic decision-making, notably to enhance female presence in company boards, by adopting recommendations and encouraging self-regulation. Two Council Recommendations (in 1984 and 1996) encouraged the private sector to increase the presence of women at all levels of decision-making, notably by positive action programmes, and called upon the Commission to take steps to achieve balanced gender participation in this regard. National self-regulation and corporate governance initiatives were aimed at encouraging companies to appoint more women into top-level positions. However, progress in increasing the presence of women on company boards has been very slow (…). The most significant progress was noted in those Member States and other countries where binding measures had been introduced. Self-regulatory initiatives in a number of Member States have not yielded any similarly noticeable changes. At the current pace it would take several decades to approach gender balance throughout the EU.’

  63. The least followed recommendations in 2013 were those concerning independent directors’ membership of governing bodies. Recommendations 12 (independent board members should be at least a third of the total) and 49 (independents should be a majority on the nomination and remuneration committee) were not adhered to by 45.1 and 38.6 % of companies respectively (CNMV, Corporate governance report of entities with securities admitted to trading on regulated markets 2013, released in 2015, Madrid, at p. 9).

  64. The Proposal makes reference to administrative fines and to the nullity or annulment, declared by a judicial body, of the appointment or election of non-executive directors that is contrary to the national provisions which impose gender balance among non-executive directors. Recently on this Proposal, see González Bustos and Fernández de Gatta Sánchez (2013), at pp. 6–12.

  65. Report of the European Parliament of 25 October 2013 on the Proposal for a Directive of the European Parliament and of the Council on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures (A7-0340/2013), amendments to the proposed Directive, Recital 22 b.

  66. Szydlo (2015), at pp. 111–112.

  67. PWC & ISOTÉS, La mujer directiva en España. Women as leaders (2012), http://www.isotes.net/wp-content/uploads/2012/06/La_mujer_directiva_en_Espa%C3%B1a.pdf (last visited 21 May 2014).

  68. Indeed, in 2010 and 2011, 74 % of the new judges and public prosecutors were women, http://www.manuelbagues.com/public_exams.html (last visited 8 May 2013).

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Authors and Affiliations

  1. School of Law, University of Zaragoza, Saragossa, Spain

    Reyes Palá-Laguna

  2. Social Sciences and Humanities Faculty, University of Zaragoza, Saragossa, Spain

    Luisa Esteban-Salvador

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  1. Reyes Palá-Laguna
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Correspondence to Luisa Esteban-Salvador.

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R. Palá-Laguna: Professor of Commercial Law. L. Esteban-Salvador: Associate Professor of Accounting and Finance.

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Palá-Laguna, R., Esteban-Salvador, L. Gender Quota for Boards of Corporations in Spain. Eur Bus Org Law Rev 17, 379–404 (2016). https://doi.org/10.1007/s40804-016-0047-x

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