A new legal notice published in February 2025 has declared the 28th December 2024 as the date on which the Promotion of Gender Balance among Directors of Listed Companies Regulations, 2024 (S.L. 456.04) are deemed to have come into force.

Source & Objectives: This development stems from the adoption by the EU of Directive (EU) 2022/2381 back in November 2022.

This aims to improve the gender balance among directors of large equity listed issuers within the EU such that, by mid-2026, every equity issuer within the European Union needs to have at least 40% female non-executive directors or have a female representation of executive and non-executive of at least 33%. Those which do not reach the objectives are to set individual quantitative objectives to improve the gender balance among executive directors.

What do these rules mean for large equity listed companies?

• Recruitment and selection procedures must allow for a balanced representation of both genders;

• There must be no discrimination in the recruitment and selection process;

• Equally qualified candidates from the underrepresented gender must be given priority for board positions.

• Large equity listed companies must disclose their progress towards meeting these gender balance targets. The report should be publicly accessible and integrated into the company’s corporate governance statement, and published on its website.

• The Member State competent to regulate matters covered by the Directive in respect of a given listed company is the Member State in which that company has its registered office. The applicable law shall be the law of that Member State.

How was this transposed in to Maltese laws?

The Directive was transposed into Maltese law by means of several legal notices, one of which was legal notice 376 of 2024, but which had not yet been declared to be enforceable. This is now enforceable as law, in the form of a subsidiary law enacted under the Equality for Men and Women Act as from 24 December 2024. Under these Regulations, the National Commission for the Promotion  of  Equality  for  Men  and  Women (NCPE) is empowered by law to promote, analyse, monitor and support gender balance on boards of listed companies in order to compile a yearly report on the implementation of the Directive. The Malta Financial Services Authority (MFSA) is also required to provide information on gender representation for the NCPE to be able to achieve its scope.

Additionally, in December 2024 the MFSA had published a Circular listing the requirements for companies which have their registered office in Malta and whose shares are admitted to trading on a regulated market. This also included reference to a new Chapter 13 added to the Capital Markets Rules which served to transpose provisions of the Directive. This new Chapter is to be read in conjunction with the existing rules which require board members on listed companies to collectively possess diversity of knowledge, judgment, and experience to properly execute their duties.

Penalties may be imposed in case of non-compliance and Member States must ensure that, in the performance of public contracts and concessions, listed companies comply with applicable obligations relating to social and labour law, in accordance with applicable Union law.

Other Similar Initiatives: This Directive is one of the several initiatives at EU level, such as that on Pay Transparency obligations, which are geared towards narrowing the gender gap.

Whereas the Women on Boards Directive (and therefore, the Maltese Regulations that have now come into force) do not apply to SMEs, the Pay Transparency Obligations and other initiatives (such as those on work-life balance) do apply to SMEs (albeit that certain obligations may be less onerous for SMEs).