Malta lags far behind 2026 deadline for gender-balanced company boards

Malta lags far behind its EU counterparts on gender balance in businesses, as the European Council green-lights new rules for publicly-listed companies to have a more balanced board of directors.

Under the new directive, which will have to be transposed by each Member State, by 2026 at least 40% of non-executive director positions in listed companies should be held by members of the under-represented sex.

While the proportion of women on the boards of the largest publicly-listed companies reached 30% in EU Member States, women only account for 9.9% of board members in Malta.

Brussels has been planning to force listed companies to reserve at least 40% of non-executive director board seats for women since at least 2012. Malta initially opposed such plans, which would directly affect government-participant companies like Bank of Valletta, and other publicly-listed companies like HSBC Malta, GO pls, Farsons and Maltapost.

If member states choose to apply the EU’s new rule to executive and non-executive director positions, the target can be reduced to at least 33% of all director positions by the same year.

If a listed company fails to achieve this objective, the company would have to adjust their selection process and put in place a fair and transparent selection and appointment procedures.

Companies would have to provide information about the gender representation of their boards at least once a year, together with information on the measures in place to reach the 33% or 40% target.

Member states will publish a list of all the companies that have reached this target on an annual basis.

A spokesperson for the Parliamentary Secretary for Reforms and Equality said government welcomes the compromise reached by the Council and European Parliament in favour of the directive. 

"That being said, to date, the Directive has not yet been published in the EU’s Official Journal. Following such publication, [government] will have two years to transpose this Directive. During this period, government shall consult with key stakeholders in the field to seek the best way forward on the implementation of this Directive for Malta."

Joseph Portelli, chairman of the Malta Stock Exchange, told MaltaToday that this was good legislation. “Research suggests women are more risk-averse than men, so women on boards, I believe, will have a stabilising effect on the management of a company.”

However, Portelli holds one concern over the implementation of the directive. “People shouldn’t be fired from boards to make room for women in my opinion. I think the way forward is to have the directive grandfathered in. As positions are made available women can fill them.”

“I also think there should be an opt-out rule. If the company is very small or services a niche area where specialised skills are necessary, and only men can be reasonably found, then I believe that should be permitted.”

Indeed, SMEs with fewer than 250 employees are excluded from the scope of the directive.

Marisa Xuereb, President of the Chamber of Commerce, said that improving gender balance in the corporate world is a positive step in principle. 

"There is ample research that shows that companies that have more diverse boards and management teams perform better, and it is not difficult to understand why. Diversity brings different perspectives to the table and stimulates more creativity and objective thinking."

However, Xuereb sees two sides to the issue. Progress in gender balance has been marginal in most countries, including Malta. If policymakers do not take a proactive approach to the issue, it would take decades to achieve a healthier board composition. But on the other hand, gender quotas can backfire if women are appointed to reach a quota, and not because of capabilities. 

"This is the pitfall we must avoid. There are plenty of capable women, and those companies that are not tapping into female talent are effectively losing out. We augur that they will make the effort to pick female board members who will bring substance and dynamism to their boards."

Another issue for company boards is the power of incumbency, according to Xuereb. "In practice, the challenge is more likely to be the power of incumbency of long-serving directors, which at times makes it difficult for companies not only to introduce female board members, but also to introduce younger males."

"The challenges of today's business world demand a combination of experience, energy and versatility even at board level. Boards need to up their game not just with respect to governance and compliance issues, but also with respect to strategy, risk-management and performance in turbulent economic times. Gone are the days when companies can afford to have boards that are there just to tick the boxes."

In reaction to government's statement, Nationalist Party spokesperson Peter Agius said that government spent 10 years negotiating against this Directive, and will now wait until the legislation is published before taking any action. 

"Meanwhile Malta is at the bottom of the European graph, with only 9% of company board positions taken up by women."