New gender representation requirements for Norwegian enterprises

Which entities do the new rules apply to? Requirements for gender representation among on the boards are already applicable for public limited companies (ASA), state-owned limited companies, state-owned enterprises (SF), municipally controlled limited companies and foundations where the public sector appoints board members.

The new rules expand the gender representation requirements to apply to Private Liability Limited Companies (AS), General Partnerships (ANS/DA), co-operatives, housing co-operatives and certain foundations. Different thresholds have been set for when the requirements will apply:

1) Private limited liability companies: Either more than 30 employees or over NOK 50 million in revenue.
2) General partnerships where all partners are legal entities: Either more than 30 employees or over NOK 50 million in turnover.
3) Foundations: Commercial foundations, foundations that pursuant to the articles of association have distributions for purposes and foundations where the state, a county municipality or municipality shall appoint one or more board members.
4) Housing co-operatives: Either more than 30 employees, over NOK 50 million in turnover or more than 500 members.
5) Co-operatives: Either more than 30 employees, over NOK 50 million in revenue or more than 500 members. 

Note that the requirement for gender representation will only apply if the board consists of three or more members, regardless of whether the other requirements are met. For example, for private holding companies without employees or operations, but where revenue as a result of changes in value or dispositions in the portfolio may exceed NOK 50 million, there will be no requirement for gender representation if the board consists of one or two members.

There are no special rules for groups, i.e. the same thresholds regarding employees and turnover must be assessed for each group company, including the parent company.

How many shareholder-elected board members of each gender? The rules for shareholder-elected directors apply if the board consists of at least three members. The same rules apply to shareholder-elected deputy members. Note that separate gender representation rules apply to employee-elected board members where those are elected.

The table below provides the maximum and minimum number of directors of each gender, based on the total number of directors:

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Gradual introduction: The rules will be gradually implemented from 1 January 2024 to 1 July 2028. The implementation is set to enter into force in a descending order, so that the larger LLCs (based on revenue/employees) will have to comply with the new requirements first.

The implementation can be summarised as follows:

1) For entities that already have a requirement for gender representation in the board, the new requirements will apply immediately from 1 January 2024.
2) From 31 December 2024, entities with a turnover of more than MNOK 100 must fulfil the new gender representation requirements. This will probably include about 8 100 entities.
3) From 30 June 2025, entities with more than 50 employees, co-operatives and housing co-operatives with more than 500 members or unit owners, and foundations that are self-employed or whose purpose is distribution or where a public authority elects at least one board member must fulfil the new gender representation requirements. This will probably apply to about 2 300 additional limited companies and co-operatives.
4) From 30 June 2026, entities with more than 30 employees must fulfil the new gender representation requirements.
5) From 30 June 2027, entities with a turnover of more than MNOK 70 must fulfil the new gender representation requirements.
6) From 30 June 2028, entities with a turnover of more than MNOK 50 must fulfil the new gender representation requirements. 

How should you proceed? Fulfilment of the new requirements on gender representation may result in the election of a board of directors that represent each gender in accordance with the requirements (cf. the table above). 

It may be necessary to amend shareholders agreements governing the board composition in case of conflicts with the new requirements. The same apply to the articles of association or other agreements.

We recommend that all entities to assess the need for changes to the board in reasonable time prior to the annual general meeting to be held by 30 June 2024.

Note that the Register of Business Enterprises will not approve filings of new board elections if the gender requirements are not fulfilled. to the board of directors if the requirements for gender composition are not met. If the gender requirements are not fulfilled, there is also a risk that the board’s resolutions can be considered void.

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AGP is a law firm specialized in transactions, capital markets and corporate. Assistance related to board composition and other company law issues is part of our core competence. We can also provide input on board candidates.

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