Boards of directors and balanced representation: how the new requirements affect corporate organisation

The requirements of balanced representation of women and men on boards of directors have ceased to be a recommendation of good governance and have become, in certain cases, a statutory mandate. The “Ley de Sociedades de Capital” —the Spanish Companies Act, the LSC— requires listed companies and, by cross-reference, certain public-interest entities to ensure that the board has a composition guaranteeing the presence of at least forty per cent of persons of the under-represented sex. Beyond the percentage figure, these requirements have a direct impact on corporate organisation: they condition the planning of appointments and renewals, they make it necessary to review selection procedures, they demand more careful documentation of decisions and they strengthen the corporate governance dimension of the board and of senior management.

04/09/2026

Corporate and commercial

1.The board of directors as a mandatory body and the framework for balanced representation

In listed public limited companies, the board of directors is a mandatory body. The “Ley de Sociedades de Capital” —the Spanish Companies Act, the LSC— provides that such companies must be administered by a board of directors and that the board must ensure that the procedures for selecting its members favour diversity of gender, of experience and of knowledge, avoiding implicit biases that may entail discrimination and facilitating the selection of female directors. The rule goes beyond mere diversity and sets a specific target: listed companies must ensure that the board has a composition guaranteeing the presence of at least forty per cent of persons of the under-represented sex. The total number of directors to be regarded as the minimum necessary to attain that target must be the percentage closest to forty per cent, and members of the board of the under-represented sex may not in any event exceed forty-nine per cent.

This mandate extends to the internal organisation of the board and to the general meeting, which is the body that appoints its members. The obligation is not confined to the initial moment; it extends to the management of vacancies arising during the term of office. Where the percentage ceases to be met as a result of the death, loss of capacity, disqualification or voluntary resignation of one of the members of the board, giving rise to an early vacancy, the listed company must again attain that percentage when appointing the new director by co-option, and must definitively restore the percentage at the first general meeting held after the vacancy. This makes it necessary to integrate balanced representation into the ordinary logic of the board's functioning.

2.Selection procedures and the planning of appointments

The new requirements are not exhausted by the setting of a percentage; they impose a particular configuration of the selection processes. The LSC requires that, where a listed company does not attain the balanced representation targets, it must adjust its processes for selecting candidates for membership of the board so as to guarantee that those targets are met. A procedure must be established that allows a comparative assessment of the competences and abilities of each candidate, designed on the basis of clear criteria, neutral in their formulation and unambiguous, ensuring a non-discriminatory process throughout all the selection stages, including the preparation of vacancy notices, pre-selection, the drawing up of shortlists and the establishment of selection pools.

The criteria that are to govern the selection must be established before the process begins. Where several candidates are equally qualified in terms of competence, professional performance and aptitude, listed companies must give preference to the candidate of the under-represented sex. This obligation may be departed from only in exceptional cases, where there are reasons of greater legal weight, such as the pursuit of other diversity policies, which are relied upon following an individual assessment and an objective appraisal, always on the basis of non-discriminatory criteria.

From a company law perspective, this obliges the nomination and remuneration committee and the board itself to review their practices. The committee, whose functions already include assessing the competences, knowledge and experience required on the board, defining the duties and abilities required for each vacancy and putting forward proposals for appointment and re-election, must incorporate the balanced representation target into its work. The planning of appointments ceases to be a purely technical exercise and takes on a regulatory compliance dimension: when designing the board's skills matrix, when providing for staggered renewals and when managing the succession of the chair and of the chief executive, the committee must take into account the impact of each decision on the representation percentage of the under-represented sex.

3.Documentation of decisions and the burden of justification

The balanced representation requirements are accompanied by duties of transparency and of documentation. Listed companies are required to inform any candidate who so requests, and provided that their candidacy was examined in the selection process, of the qualification criteria on which the choice was based, of the comparative assessment of the candidates and, where applicable, of the reasons that led to the choice of a candidate who was not of the under-represented sex. In court proceedings brought by the candidate who was not selected in which, from the claimant's submissions, it may be inferred that their qualifications were equal to those of the selected candidate, the claimant being of the sex under-represented on the board, it falls to the listed company to provide an objective and reasonable justification, sufficiently proved, of the selection made and of compliance with the requirements of the selection procedure.

This has direct consequences for corporate organisation. The nomination committee and the board must systematically document the selection processes: the criteria used, the assessment of each candidacy, the weighting of competences, the diversity analysis and the reasons for the final decision. The minutes of the committee and of the board, as well as internal reports, become key items in demonstrating that the company has complied with its balanced representation and non-discrimination obligations. A lack of documentation may hamper the company's defence in the event of a challenge and weaken the position of the management body in the face of any allegations of non-compliance.

4.Impact on corporate governance and on senior management

The balanced representation requirements are not confined to the board; they extend to senior management. The LSC provides that listed companies must ensure that senior management has a composition securing the presence of at least forty per cent of persons of the under-represented sex. Compliance with this principle must be set out in detail in the notes to the annual accounts provided for in Chapter II of Title VII of the LSC. If the percentage does not reach forty per cent, the company must provide an explanation of the reasons and of the measures adopted in order to attain that minimum percentage in the immediately following financial year and in subsequent years.

The board, as the body responsible for corporate governance, must integrate this requirement into its policy on appointments and on the development of senior management. The nomination and remuneration committee, which reports on proposals for the appointment and removal of senior managers and on the basic terms of their contracts, must incorporate the balanced representation perspective into its recommendations. Succession planning for the chief executive and for other key posts, the identification of internal talent and the promotion policy must be aligned with the balance objective.

The obligation to prepare and publish, as part of the sustainability report, annual information on the representation of the under-represented sex on the board and in senior management strengthens the corporate governance dimension. That information must be easily accessible on the company's website, must be sent to the supervisory authority and must be kept available for a minimum period of ten years. It must distinguish between executive and non-executive members of the board, compile the measures adopted to attain the balanced representation targets and, in the event of non-compliance, include the reasons and an exhaustive description of the measures envisaged in order to meet them. The simultaneous dissemination of this information together with the annual corporate governance report and the annual report on directors' remuneration underlines its importance.

5.Extension to public-interest entities and coordination with other requirements

The balanced representation requirements extend, by virtue of an additional provision, to certain public-interest entities beyond listed companies. They apply to entities which are regarded as public-interest entities in accordance with the “Ley de Auditoría de Cuentas” —the Spanish Audit Act— and which meet certain size requirements: an average number of employees of more than 250 and annual turnover or total assets above certain thresholds. In such entities, the board of directors must likewise secure the minimum presence of forty per cent of persons of the under-represented sex, subject to the same procedural and documentation requirements, although without the obligation to send annual information to the supervisory authority where they are not listed.

This extension requires the boards of directors of unlisted but significant entities to review their organisation. Coordination with other corporate governance requirements, such as the existence of audit committees and of nomination and remuneration committees, the annual evaluation of the performance of the board and of its committees, and the preparation of management and sustainability reports, becomes more complex. Balanced representation becomes one more element of the compliance matrix that the board must manage.

6.Practical consequences for the functioning of the board

From a strictly company law perspective, the new balanced representation requirements affect the functioning of the board on several levels. First, they condition the composition of the body, making it necessary to treat gender balance as a structural criterion alongside experience, independence and diversity of knowledge. This may entail reviewing the size of the board, the duration of terms of office and the renewal policy in order to facilitate the incorporation of persons of the under-represented sex without sacrificing continuity and stability.

Second, they influence the internal dynamics of the board. A more balanced presence of women and men may alter the culture of deliberation, the perception of risk and the sensitivity to certain matters, such as people management, corporate social responsibility or communication with stakeholders. Although the law does not impose quotas on specific committees, balanced representation on the board tends to be reflected in the composition of the audit committee and of the nomination and remuneration committee, which may affect the way in which the selection of directors, the remuneration policy and the supervision of financial information are approached.

Third, they reinforce the need for planning. The board must anticipate the impact of each appointment and of each removal on gender balance, particularly in situations of vacancies arising during the term of office. Co-option, as a mechanism for filling vacancies until the next general meeting, becomes a tool that must be used with an eye to the representation percentage. The nomination committee must maintain a pool of candidates enabling it to react swiftly without sacrificing the quality of the process.

7.Conclusion: balanced representation as a vector of corporate organisation

The new requirements of balanced representation of women and men on boards of directors are not a mere quantitative adjustment; they are a vector of corporate reorganisation. They require listed companies and certain public-interest entities to integrate gender balance into the composition of the board, into the selection and renewal procedures, into the planning of appointments, into the documentation of decisions and into corporate governance policy. The nomination and remuneration committee and the board itself must adapt their practices in order to meet specific targets, justify their decisions and reflect in their reports how representation is evolving.

Beyond formal compliance, these requirements invite a rethinking of the architecture of the management body and of senior management, incorporating diversity as a structural element of the capacity to supervise and to decide. Balanced representation becomes one more component of corporate design, alongside independence, sector experience and diversity of knowledge. Managing it properly demands rigour in the processes, transparency in the information provided and consistency in planning. If it is approached seriously, it may help to improve the quality of corporate governance and the legitimacy of the board's decisions; if it is reduced to mere numerical compliance, it risks becoming a formal obligation with no real impact on the organisation of the company.

Alburquerque AbogadosJosé Manuel AlburquerqueBarcelona 04/09/2026

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