Is Your Board Legally Compliant? A Guide to a Legally Compliant Gender Balance
In 2024, historic rules came into effect that extended the requirement for gender representation to a large number of Norwegian companies. Do you know if your company is affected by the rules this year?
The Rules Affect Most Companies, but in Phases
The new gender balance requirements are now being fully rolled out. The new rules are introduced in five phases until 2028, based on the company's size. The criteria are either total operating and financial revenues or the number of employees. It's important to note that as soon as you cross one of the thresholds, you must meet the requirement by the deadline for that specific phase.
For many, this means actively changing the board composition to avoid sanctions. However, the changes should not only be seen as a duty—it's also an opportunity to modernize the board.
Who Do the Gender Balance Rules Apply To?
The representation requirement itself is designed to ensure that neither gender has an overwhelming majority. It's no longer just public limited companies (ASA) that must meet the requirements. The rules are now being rolled out to private limited companies (AS), cooperatives, and housing cooperatives.
In the long run (by 2028), your company will be covered if you meet one of the following criteria:
- You have more than 50 million NOK in total operating and financial revenues.
- You have more than 30 employees.
When Exactly Do the Rules Affect Your Company?
The implementation is happening in phases leading up to 2028. It is crucial to check which phase you fall under, so you are prepared for the next board election.
| Phase | Compliance Deadline | Who is covered? |
|---|---|---|
| 1 | Effective now | Companies with >100 million NOK in revenue. |
| 2 | June 30, 2025 | Companies with >50 employees (and certain cooperatives/foundations). |
| 3 | June 30, 2026 | Companies with >30 employees. |
| 4 | June 30, 2027 | Companies with >70 million NOK in revenue. |
| 5 | June 30, 2028 | Companies with >50 million NOK in revenue. |
Source: The Government's overview of the phased introduction. Note: The table is simplified for clarity.
How Many of Each Gender?
The requirement is designed to ensure that neither gender has an overwhelming majority. The rules apply to shareholder-elected board members:
- Board of 3-4 members: Maximum of 2 of the same gender.
- Board of 5-6 members: Maximum of 3 of the same gender.
- Board of 7 members: Maximum of 4 of the same gender.
- Board of 8 members: Maximum of 5 of the same gender.
- Board of 9+ members: Maximum of 60% of the same gender.
Gender Balance Isn't Just Law, It's Smart!
Although the law forces change, it is smart to view this as a strategic opportunity. International research, including from the McKinsey report "Diversity Wins" (2020), shows a clear correlation:
Companies with a high degree of gender diversity in leadership are 25 percent more likely to achieve above-average profitability!
Diversity in the boardroom thus provides value beyond compliance:
- Better decisions: Different perspectives reduce the risk of "groupthink" and blind spots in discussions.
- Increased innovation: A broader range of experiences increases the chance of new thinking.
- Attractiveness: A modern, balanced board sends positive signals to investors, employees, and customers.
In other words: Don't just see this as a mandatory exercise, but as an opportunity to bring in new and valuable expertise!
How to Get Started
To comply with the rules, the board and owners must act now:
- Check financial figures and employee lists against the deadlines in the table above.
- What does the current board look like? Who is up for election?
- Start the process early. Finding competent board members takes time.
Unsure if You Meet the Requirements?
A modern board portal like 21st.ai gives you a complete overview of your board composition and notifies you of legal requirements. This ensures your company is always in line with regulations while streamlining board work.