Date 25.06.2024
On 1 January 2024, the new regulation promoting gender balance in boards of Norwegian corporate entities, including private limited liability companies exceeding certain thresholds, came into force. From 31 December 2024 the first private limited liability companies must be compliant with the gender representation requirements – and the number of companies comprised by the regulation will be expand gradually over the next four years. By June 2028, all companies with a total income of NOK 50 million or 30 employees will be obligated to fulfill with the gender balance requirements in Norwegian board rooms.
The new legislation covers private limited lability companies that either has an operating and financial income exceeding NOK 50 million or have more than 30 employees. The gender balance requirements will be gradually introduced following a phased implementation, whereas companies exceeding the thresholds below will be obligated to meet the new requirements:
If or when (i) a company exceeds one of the thresholds outlined above, and (ii) the board consist of three or more board members, the gender composition of the board must meet the following requirements:
The same applies to deputy board members. Employee-elected board members are subject to a separate assessment, following a diverging set of requirements and exceptions.
The requirements do not apply for boards with only one or two board members.
During the phased implementation (phase 1-5 above) companies that exceed one of the thresholds must comply with the gender balance requirements by the relevant date of implementation at the latest.
After the transition period, a company that becomes obligated to meet the gender balance requirements must comply with the relevant requirements no later than one month following the first subsequent ordinary general meeting.
If the company is in breach with its obligations to maintain a required gender balance, the consequences can be severe.
First, if the company fails to comply with the gender balance requirements, the board is not validly elected and cannot validly exercise its authority as governed by law.
Second, the Norwegian Register of Business Enterprises will refuse to register a board of directors that does not comply with the gender balance requirements.
Finally, the company will be compulsory liquidated by the Norwegian courts if the company fails to meet the requirements after a final deadline set out by the court.
Accordingly, it is of great importance that all shareholders of Norwegian private limited liability companies of a certain size are prepared to make the necessary changes to their board of directors – in order to ensure compliance with the new regulation, and to maintain an operational and successful board composition.
