Gender Balance on Boards of Listed Companies: Luxembourg transposes EU Directive

On 17 December 2025, the Luxembourg Parliament voted Bill n°8519 (“Law”) transposing Directive (EU) 2022/2381 on improving the gender balance among directors of listed companies and related measures (“Directive”). It sets out key requirements regarding the composition of boards of listed companies, but also certain new reporting and publication requirements as well as sanctions for non-compliance. The main takeaways are discussed below.

Scope

The obligations laid down in the Law apply to companies having their registered office in Luxembourg and whose shares are admitted to trading on an EU regulated market (“listed companies”), excluding those qualifying as micro, small and medium-sized enterprises (SMEs). An SME is defined in the Law as a company which employs fewer than 250 persons and has an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million. According to the parliamentary documents, approximately 30 companies in Luxembourg will need to comply with the provisions of this Law. 

Quantitative objective and “comply-or-explain” approach

Article 3 of the Law submits listed companies to a quantitative objective to be achieved by 30 June 2026, namely that members of the underrepresented sex occupy at least 33% of all director positions, both executive and non-executive directors, by that date. The number of all director positions deemed necessary to meet the objective should be the number closest to the proportion of 33%, without exceeding 49%. The 49% cap is used only to determine the minimum number necessary to achieve the objective and does not constitute an absolute cap. It therefore does not prevent equal representation of genders. 

The Directive offers the Member States a choice between two quantitative objectives to be reached by 30 June 2026, namely the underrepresented sex occupying (a) at least 40% of non-executive director positions or (b) at least 33% of all director positions, including both executive and non-executive directors. Luxembourg opted for the second option to increase the proportion of members of the underrepresented sex in all decision-making positions, not just in non-executive director positions. The stated aim is to attract female talent to companies, creating an indirect or “spill-over” effect, encouraging an increased presence of women at all levels of management and among the workforce, which could, in turn, have a positive impact on the gender employment and pay gaps between women and men.

Indicative numbers of directors required to comply with the objective are set out in the table below.

The Law provides no sanctions for not meeting the quantitative objective itself. Indeed, as explained below, sanctions may only be applied in the event of non-compliance with the selection process, reporting, or publication requirements. In this respect, the parliamentary documents explain that the Directive establishes a “comply-or-explain” mechanism: if a listed company does not achieve the objective, it must provide the reasons for not achieving it and a complete description of the measures already taken or planned to achieve it.

Listed companies that do not achieve the quantitative objective are required to adjust their process for selecting candidates for director positions (Article 4 of the Law).

Key selection process obligations and information to shareholders/employees

According to Article 4 of the Law, candidates must be selected based on a comparative assessment of their qualifications. For this purpose, clear, neutrally formulated and unambiguous criteria must be applied in a non-discriminatory manner throughout the entire selection process, including during the preparation of vacancy notices, the pre-selection phase, the shortlisting phase and the establishment of selection pools of candidates. Such criteria must be established in advance of the selection process.

When choosing between candidates who are equally qualified in terms of suitability, competence and professional performance, priority must be given to the candidate of the underrepresented sex unless, in exceptional cases, reasons of greater legal weight, such as the pursuit of other diversity policies, tilt the balance in favour of the candidate of the other sex.

Where the selection process for appointment or election to a position as a director is conducted by a vote of shareholders or employees, listed companies shall ensure that they are properly informed of the obligations imposed by law, including the penalties to which the listed company may be liable in the event of non-compliance with its obligations.

Failure to comply with the selection process requirements may result in sanctions as detailed below.

Reporting

Listed companies must report annually to the Commission de Surveillance du Secteur Financier (CSSF) on the composition of their boards, distinguishing between executive and non-executive directors and regarding the measures taken to achieve the quantitative objective. In this respect, the CSSF is responsible for analysing and monitoring the gender balance on boards. In particular, the CSSF will publish and regularly update a list of the listed companies that have achieved the quantitative objective. Failure to comply with reporting obligations may also result in the sanctions detailed below.

Publication on website

Listed companies must publish information on the composition of their boards on their website. When the quantitative objective is not met, the listed company must publish the reasons for this shortfall and provide a full description of the measures already taken or intended to achieve the objective (Article 5(1), second line of the Law). If applicable, this information shall be included in the corporate governance statement as provided for by the Accounting Directive and as transposed, in particular, by Article 68ter of the Accounting Law¹. Here also, failure to comply may result in sanctions.

Administrative measures and sanctions

The CSSF has the power to request listed companies to provide the necessary information and to order them to comply with the selection process as well as reporting and publication obligations. Moreover, the CSSF has the power to sanction violations of the selection process, reporting and publication obligations by taking various administrative measures and sanctions, including: a warning; a reprimand; a public statement specifying the identity of the listed company and the nature of the violation; an injunction directing the listed company to comply with the obligations; and finally, an administrative fine ranging from 250 to 250,000 euros. As mentioned above, there are no sanctions for not meeting the quantitative objective itself. 

Next steps

Given that the Law does not provide for transitional provisions, the general rule according to which legal acts published in the Official Journal are binding on the fourth day following their publication applies. Given that the deadline for meeting the quantitative objective is 30 June 2026, listed companies should start reviewing the current composition of their boards and selection processes, and start preparing for the required reporting and publication to ensure timely compliance with those new requirements.