In Croatia, the principle of equal opportunities for women and men and gender-balanced representation in top management positions within companies will soon be regulated by law. Amendments to the Companies Act are currently in progress, which will incorporate Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and related measures. The deadline for implementing the Directive into national law is December 28, 2024. This is why the amendments to the Croatian Companies Act have been proposed through an urgent procedure.

The purpose of the Directive and its implementation into the national laws of EU member states is to address the issue of underrepresentation of women in company management. Although the EU has a large and growing pool of highly qualified women — currently, about 60% of university graduates are women — only around 35% of board members and approximately 9% of CEOs are women[1]. Additionally, numerous studies have shown that diversity fosters innovation and leads to more proactive business models, more balanced decision-making, and improved professional standards in management, which better reflect societal realities and consumer needs.

This Directive applies only to companies whose shares are traded in regulated markets and does not apply to micro, small, and medium-sized enterprises.

To achieve the Directive's goal, member states must ensure that by June 30, 2026, the underrepresented gender occupies at least 40% of non-executive board positions or at least 33% of all director positions, including executive directors and non-executive board members, in companies whose shares are traded on regulated markets.

Specifically, when selecting candidates for appointment or election to a director position, preference should be given to equally qualified candidates from the underrepresented gender. However, this preference should not be automatic or unconditional. It must be ensured this advantage can be overridden in special cases if there are particularly justified reasons favoring a candidate of the opposite gender.

What does this mean for companies that do not comply with the said obligations? They will face penalties, both for the company itself and for the responsible person within the company. In addition, if equally qualified candidate from the underrepresented gender is unjustifiably denied a position, legal action may be taken, with the burden of proof falling on the company to show that the preference was not unjustly denied.

Thus, ensuring gender balance in the management bodies of publicly traded companies will become a legal obligation. It remains to be seen whether these amendments to the Companies Act  will truly increase the representation of women in the boards of these companies.