The second management position law (FüPoG II) contains a quota of women for the boards of certain companies and the obligation to determine a target for boards of directors and supervisory boards not included. Furthermore, the two management levels below the executive board also make regulations for determining a target variable. In addition, reporting obligations are specified, which must be observed in the corporate governance statement. Nevertheless, different validity dates apply to all new regulations.

This naturally leads to the question of when the quotas should be applied and when they should be reported. In this article, we deal with this and explain how you can completely avoid the reporting obligation until 2026 as a result of a legal gap and how you do not have to pay attention to the new, stricter female quotas until 2026.

The new regulations by the FüPoG basically have 3 goals. On the one hand, they introduce in § 76 paragraph 3 AktG a new quota for women for board members of certain companies. On the other hand, target values for the proportion of women are to be determined for board members that are not covered by this regulation and for supervisory boards in § 111 (5) AktG. Finally, there are also the regulations for the target size for the two management levels below the Executive Board. These regulations are reinforced by a more comprehensive reporting obligation in § 289f paragraph 2 number 4 to number 5 letter a HGB. It is therefore necessary to explain how and why the quota and the targets were set. It must also be reported whether these objectives have been achieved and, if not, why not. To this end, the sanctions regime for breaches of reporting obligations has also been specified.

From when these new provisions are to be applied is regulated in § 26l (1) and (2) ECAktG and in Art. 87 ECHGB. It is striking that the reporting obligations under § 289f HGB should already be applied to corporate governance statements for financial years starting after 31.12.2020. This means that it already applies for the financial year corresponding to the calendar year 2021.

Therefore, the reporting obligation applies for statements to be made in 2022 for the financial year 2021. Nevertheless, according to § 26l paragraph 1 of the ECAktG, the quota for women on the Executive Board is only available from 1 January. August 2022 when appointing individual or several Board members. Thus, the obligation to comply with the women’s quota applies only after the reporting obligation applies. Furthermore, for the first time, the amended regulations on the targets will apply to the setting of targets from the 12th. August 2021 Application. Therefore, a problem of the new regulation by the FüPoG is to determine what applies and should be observed when.

Technical advice for

Female quota?

First attention is paid to the quota of women for the Executive Board. According to § 76 paragraph 3a AktG, in the case of listed and co-determined companies with a board of more than three persons, at least one man and one woman must be a member of the board. Therefore, it may also be necessary to appoint additional members of the Executive Board when appointing or reappointing the Executive Board. According to § 26l (1) ECAktG, this regulation must be observed from 01.08.2022 when appointing individual or several members of the Executive Board.

With regard to the new quota for women, § 289f paragraph 2 number 5 letter a HGB now also provides for a new reporting obligation. This applies to listed companies which, pursuant to § 76 paragraph 3a AktG, must appoint at least one woman and at least one man as a member of the Executive Board. For these companies, indicate whether the company complied with this requirement during the reference period and if not why.

According to Art. 87 ECHGB, this regulation applies to the corporate governance statement from the financial year 2021. Therefore, the report is to be made in 2022 in the corporate governance statement for 2021. On the other hand, companies must not observe the women’s quota until 01.08.2022. Therefore, the reporting obligation for the corporate governance statement for the financial year 2021 is in vain.

The reporting obligation continues to be void if the company does not have a duty to take into account the women’s quota. For example, the obligation does not apply if the company is not listed or co-determined. In addition, the reporting obligation does not apply if the Management Board consists of fewer than four persons or because no appointment of a Management Board member took place during the reference period. Nevertheless, even in this case, if the company is listed on the stock exchange and co-determined, the obligation to set a target value in the Executive Board according to § 111 paragraph 5 AktG still applies.

A mandatory quota of women is not introduced for the two management levels below the Executive Board. The legislator leaves it to the existing regulation for the determination of targets and their publicity. However, it also allows for targets of zero. However, the targets for setting targets for the proportion of women have now increased. These requirements increase especially when setting a target value of zero with regard to the scope of decision and justification or the publicity.

The tightening applies according to § 26l paragraph 2 ECAktG for the first time for the setting of targets from 12.08.2021. Furthermore, a new definition of targets must be carried out at the latest every five years. The new definition may also simply repeat or confirm the old one. However, there is no obligation to recast the targets under the new regime before an ongoing implementation period expires. Accordingly, compliance with the regulation can be delayed until 2016 if you have set the targets shortly before 12.08.2021 and therefore under the old law.

The targets of § 111 paragraph 5 AktG concern supervisory boards that are not covered by the women’s quota of § 96 paragraph 3 AktG and board members that are not covered by § 76 paragraph 3a AktG. No mandatory quota of women is foreseen for these supervisory boards and board members. Only the specifications for setting the target quotas to be determined by the Supervisory Board, their justification and publicity were tightened. According to § 26l paragraph 2 of the ECAktG, these regulations also apply for the first time for the setting of targets from 12.08.2021. The fulfillment of this obligation can also be delayed until 2026, as above.

3.3.1. Design of the reporting obligation

According to § 289f paragraph 2 no. 4 HGB, statements on corporate governance are to be included in these companies, which contain the prescribed definitions and justifications as well as information on whether the specified targets have been achieved during the reference period. If the targets have not been met, the reasons must be given.

3.3.2. Obligation according to the new version of §§ 111 paragraph 5, 76 paragraph 4 AktG necessary

The reporting requirement requires an obligation to set the targets in accordance with the version amended by FüPoG II. Therefore, within the framework of the reporting obligation, the requirements of the new § 111 paragraph 5 AktG or the new § 76 paragraph 4 AktG must be fulfilled.

In the reporting obligation with regard to the requirements of § 76 paragraph 4 AktG, i.e. the target values for the two management levels below the Executive Board, the reference to the new version results from the wording. This is based on the fact that § 289f paragraph 2 no. 5 HGB explicitly refers to § 76 paragraph 3a AktG, newly inserted by FüPoG II. It is therefore clear that the reporting obligation applies to a new regulation and only applies if the conditions of this new regulation are also met.

The reference to the new version of § 111 paragraph 5 AktG is not so clear. Nevertheless, the reporting obligation also explicitly refers to the target value zero, which was introduced only by the new changes. Therefore, the stricter reporting obligation only exists when the targets for the two management levels below the Executive Board, for the Supervisory Board or for the Executive Board have been set under the new law. Therefore, the fulfilment of the reporting obligation can be delayed until 2026, in which the obligation to comply with the targets is delayed until then.

3.3.3. No application of the old reporting obligation

It has to be clarified whether the old reporting obligation continues to apply. The wording of § 289f paragraph 2 no. 4 HGB opposes this because it requires that the target size must be determined according to the new law. Accordingly, a look at the transitional provision of Art. 97 ECHGB is also necessary. This standard requires the first-time application of § 289f paragraph 2 number 4 HGB for the financial year starting after 31.12.2020. From then on, the old rule no longer applies. Therefore: the regulation is applicable from the financial year 2021 but does not cover companies that do not yet have to make any determinations under the new legal situation. Then the companies that do not (yet) fall under the new regulations do not have to report under an old, no longer applicable regulation. Accordingly, the reporting obligation per se does not apply to the following entities: