Companies Need More Time to Report on Gender Balance in Management Bodies

A draft law amending the Securities Market Act has reached the Riigikogu, which establishes a gender balance requirement for the management bodies of listed companies.

The Chamber supports the general objective of the draft to promote greater participation of women in the activities of company management bodies. However, we prefer voluntary measures over the imposition of obligations, although we understand that transposing the requirements from the directive is inevitable.

The Deadline for the First Gender Balance Reporting by Management Bodies Must Be Postponed

The Chamber considers the initial deadline for the gender balance reporting obligation to be unreasonable. The current draft foresees that share issuers must submit their first report on the gender balance of their management bodies to the Financial Supervision Authority by July 1, 2025. This deadline is too soon, as the adoption and entry into force of the law will still take time, leaving companies with too short a preparation period. Moreover, many companies’ general meetings will occur before the law comes into force, possibly necessitating an extraordinary meeting to fulfill the new obligation.

Additionally, the EU directive does not set a fixed date for the first report submission, so Estonia could determine this more flexibly. The Chamber proposed to the Riigikogu to postpone the reporting obligation and align it with the deadline for achieving the gender balance objective—June 30, 2026. At the same time, we believe companies should have the option to submit their report earlier if they wish.

There Is No Need for a Negative List Regarding the Fulfillment of Gender Balance Objectives

According to the draft, the Financial Supervision Authority will publish on its website a list of share issuers, indicating whether or not they meet the gender balance objectives. While the directive requires the publication of such information only for companies meeting the objectives, the draft also proposes a so-called negative list for those not meeting them.

In the Chamber’s view, publishing a negative list will not accelerate changes in management members, as both the draft and the directive foresee a gradual implementation of changes in accordance with the expiration of management contracts. Therefore, achieving the objectives may take several years. Meanwhile, a negative list could misleadingly portray companies in a poor light. The directive does not require a negative list. Additionally, in the Chamber’s view, the draft does not sufficiently justify the need for such a list. Therefore, the Chamber proposed to the Riigikogu to exclude the negative list from the draft.