Corporate

Clarification in respect of the new gender-neutral representation requirement in the appointment process of the Deputy General Manager (Directeur général délégué) in French joint-stock companies (sociétés anonymes)

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Article L.225-53 of the French Commercial Code

Law N°2019-486 of May 22, 2019, (loi “PACTE”) introduced into French law several provisions aimed at improving the representation of women in the management bodies of companies.

In this context, a specific provision was inserted in the French Commercial Code to ensure equal gender representation in the appointment of Deputy General Managers (DGD) in joint-stock companies (société anonymes).

In accordance with article L.225-53 of the French Commercial Code, the DGD is appointed by the Board of Directors upon proposal of the General Manager (Directeur général (DG)). The new text supplements the existing provisions with the obligation, for the Board of Directors, to determine “a selection process which guarantees, until its completion, the presence of at least one person of each sex among the candidates. These proposals of appointment should seek a balanced representation of women and men.”

However, questions have arisen as to the practical implementation of this text.

Indeed, does the “selection process” mentioned by the new text obliges the General Manager to propose at least one woman and one man to the Board of Directors, or simply to carry out a selection that takes into account the rules of parity before the proposal is made to the Board of Directors?

In a statement published on January 6, 2021, the ANSA, the National Association of French joint-stock companies (Association Nationale des Sociétés par Actions) answered this question by taking a clear position in favour of the second option.

ANSA considers that, by definition, the “selection process” of candidates takes place before the proposal of appointment made by the General Manager to the Board of Directors. Thus, the new text would not require the General Manager to present to the Board one candidate of each sex for the position of Deputy General Manager. Since the power of appointment proposal to the Deputy General Manager is reserved for the General Manager, compliance with the new gender-neutral requirement in the selection of candidates could be imposed only on the latter. According to the ANSA, it would only be during the selection of candidates for the position of Deputy General Manager that the General Manager should guarantee the presence of at least one person of each sex.

The Legal Committee also specifies that if the French legislator had wished the General Manager to propose a man and a woman as candidates, it would have expressly mentioned it. Finally, the ANSA notes that the search for a balanced representation of men and women is only an obligation of means (obligation de moyen), since the legislator has chosen to use the verb “to endeavour”.

This new provision, which aims to obtain a balanced representation of men and women, would then be more incentive than coercive, French companies being only encouraged to put in place good practices in terms of representativeness in the appointment of Deputy General Manager. This happens to significantly reduce the scope of the new text.

It should however be noted that, although no sanctions are expressly provided at this stage in case of breach of this new provision, board members could be held liable if the selection process provided by the law is not properly implemented, for example, in case of exclusion of a candidate for discriminatory reasons. Therefore, in case of appointment of a Deputy General Manager in the coming weeks/months, we recommend keeping evidence that a gender-neutral selection process has taken place.

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