German Industry Says Proposed EU Gender Quotas Are Illegal

German industry groups representing thousands of companies and small businesses voiced their opposition to gender quotas imposed by the European Union, which they say would impinge on shareholder rights and be illegal.

The proposed 40 percent threshold for female directors on supervisory boards would particularly burden family-owned companies, the presidents of the BDA, BDI and DIHK trade groups said in a letter to politicians including Economy Minister Philipp Roesler obtained by Bloomberg News today.

“Substantially increasing the number of women in leadership positions is an important issue of concern for German business,” the groups said. “It is nonetheless firmly against binding standards of a uniform quota for supervisory or executive boards.”

The European Commission adopted a draft proposal in November aimed at requiring supervisory boards to be at least two-fifths female by 2020. Companies may face sanctions if they fail to favor women over equally qualified men.

Germany lags European peers when it comes to female representation on corporate boards. Women represent 7.2 percent of the total number of German executive board members and 13.8 percent of supervisory board members, according to an October study by the European Commission. That compares with an EU-wide average of 15.8 percent and 16.8 percent, respectively.

The new measures would apply to about 5,000 listed companies in the EU by 2020 and state-owned companies by 2018, the commission said. They exclude companies with less than 250 employees or global sales below 50 million euros ($64 million).

The letter, which was also sent to Labor Minister Ursula von der Leyen, Justice Minister Sabine Leutheusser Schnarrenberger and Angela Merkel’s Chief of Staff Ronald Pofalla, said the quota contravenes the EU’s subsidiarity principle, which gives national laws precedence over those agreed in Brussels.

“The measures already undertaken by EU member states to increase the proportion of women in leadership positions in the private sector are not taken into sufficient account,” the industry bodies wrote.

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