Ensuring gender equality in the management of two Latvian companies will still not become a mandatory requirement. The Saeima majority has rejected for the second time the draft law on Ensuring Gender Balance in the Management Bodies of Capital Companies developed by the Ministry of Welfare. For companies this, of course, allows a sigh of relief, but for Latvia it may cost a few hundred thousand euros.
According to the criteria included in the draft law, it would currently apply only to two Latvian companies – AS DelfinGroup and AS Amber Latvijas balzams.
The draft law was not referred to Saeima committees because of deputies from the Union of Greens and Farmers in the coalition. Most of them abstained in the vote, with only a few clearly expressing their position by voting against. It should be taken into account that the draft law was drawn up by the Ministry of Welfare, which is under the supervision of the Union of Greens and Farmers, and the draft law was also approved by the government.
Before the vote, Andris Šuvajevs (The Progressives) appealed to the conscience of Saeima deputies, reminding them that the state is already trying to reduce expenditures, but by not referring the draft law at least to committees, Latvia risks fines, because the law must be implemented in accordance with a European Union directive.
“I would even urge you to look at this as [..] a fiscal responsibility decision, because if we do not transpose this directive, it is clear that Latvia will have to pay fines. [..] It seems to me that any deputy who at this moment does not support the referral of this particular draft law to a committee is in fact taking a fiscally irresponsible decision. And therefore any kind of further rhetoric that may come from deputies or politicians related to some kind of savings in state expenditure, in my view, simply loses its legitimacy. You are clearly in this way just ignoring the obligations that Latvia will have,” said A. Šuvajevs, whose message still did not find enough receptive ears.
The politician referred to the Treaty on the Functioning of the European Union, which stipulates that Member States must adopt the rules necessary to ensure the transposition of directives into the national legal system within the deadlines set in those directives, and these rules must be notified to the European Commission without delay. From the moment the EC establishes a failure to implement a directive and imposes a fine on a Member State, a couple of years usually pass. Thus, for a failure to implement a directive in the field of electronic communications identified in 2022, Latvia received the fine invoice of 300 thousand euros only in 2024.
The draft law provided that, to ensure gender equality in certain large companies, representatives of one gender may not constitute more than two thirds of the management.
The annotation to the draft law states that the law would apply to capital companies whose registered office has been in Latvia for two financial years, which have an average number of employees of at least 250 people, whose net turnover is at least 50 million euros or whose total balance sheet is at least 43 million euros.
In these companies it was planned to require that representatives of the under‑represented gender occupy at least 40% of the seats on the supervisory board, or that representatives of the under‑represented gender occupy at least 33% of all supervisory board and management board positions.
These capital companies would have to comply with at least one of the specified requirements by 30 June of this year. Capital companies that had not achieved one of the specified gender balance targets by the end of summer 2026 would be required to provide the necessary information to the Bank of Latvia to prove that the candidate selection process has been transparent and complies with the established requirements. At the same time, the Bank of Latvia would publish on its website information on violations by capital companies, and, if necessary, impose enforcement measures to ensure proportional gender representation on management and supervisory boards, including enforcement measures specified in the Administrative Procedure Law could be applied to the company.
If a capital company had not achieved gender balance by the specified date because the term of office of the management or supervisory board had not expired by that date, the capital company would not be obliged to recall members of the management and supervisory board and organize an extraordinary candidate selection process to ensure gender balance.
Members of the management and supervisory board may continue to hold office until the end of their term of office, after which the capital company is obliged to organize an open candidate selection process.
Originally published at https://inc-baltics.com/dzimumu-lidzsvara-jautajuma-uznemeji-uzelpo-valstij-tas-var-izmaksat-simtiem-tukstosus/
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