Minister Damir Habijan presented to the Croatian Parliament a proposal for amendments to the Companies Act that ensures equal opportunities for women and men in top management positions in large companies
"These amendments introduce solutions from the Directive of the European Parliament and of the Council on improving the gender balance among directors of listed companies, with a view to ensuring the application of the principle of equal opportunities for women and men among the top management positions in large listed companies. At the moment, there are 24 companies that meet the three conditions from this Directive, namely that they have more than 250 employees, that their annual turnover exceeds EUR 50 million and the annual balance sheet total exceeds EUR 43 million", explained Minister Habijan presenting the proposal for amendments to the Companies Act.
The amendments also ensure the implementation of the recommendations of the OECD Corporate Governance Committee, which will review the fulfilment of the set terms and conditions for Croatia’s accession to the OECD. In addition, the amendments will serve as a basis for harmonising the Code of Corporate Governance and the rules of the stock exchange.
The main objective is to ensure that members of the underrepresented sex on boards, which are mostly women in Croatia, occupy at least 40% of positions relating to non-executive directors and alternatively overall when we talk about all director positions, regardless of whether they are executive or non-executive directors.
"One of the main factors that will enable the proper implementation of this Directive is the effective application of criteria for the selection of directors, which should be established in advance and in a transparent manner", said Minister Habijan.
The Minister further clarified that in most Member States, and this is what prompted the adoption of this Directive in the European Parliament and the Council, there is a lack of transparency in the selection process and qualification criteria for director positions when it comes to gender balance, which negatively affects the application of persons for these functions, but also the decision of investors who could have investment strategies for which they need information related to the expertise and competence of directors.
"At present, the 24 listed companies subject to the Directive will have to comply with this obligation by 30 June 2026. In the selection of candidates for appointment or election to a director position, priority should be given to an equally qualified candidate of the underrepresented sex. However, such a priority should not be automatic and unconditional," the Minister added.
Failure to comply with this gender balance measure will result in the nullity of decisions on the selection of directors.
"It is to be expected that other companies, i.e. smaller and medium-sized enterprises, will follow their example", Minister Habijan concluded.
Recommendations of the OECD Corporate Governance Committee
As regards the recommendations of the OECD Corporate Governance Committee, their objective is to deprive a member of the supervisory board who has a related-party relationship with enterprises with which the company does business, or there are reasonable grounds for suspecting a conflict of interest, of the right to participate in the work of the board.
The legislative proposal also proposes to impose an obligation on the board of directors, i.e. the executive directors of a company, to prepare a report on transactions with affiliated companies on an annual basis.
As regards shareholders, their obligation is to notify the company in writing of the conclusion of a shareholders’ agreement the purpose of which is to consolidate the shareholding structure and/or to achieve stable management in the company, with a view to registering the shareholders’ agreement in the companies’ register (“court register”).
As regards the amendments relating to the holding of the shareholders' general meeting, there are three main amendments which are intended either to be provided for in the statutes or to confer on the management of the company the power to hold the general meeting exclusively online, which has not been the case so far, the so-called virtual general meeting. Secondly, it introduces the possibility of a hybrid general meeting, meaning that an individual shareholder will be able to participate in the general meeting via videolink, without being at the place of the general meeting itself. The third novelty is the possibility of voting by correspondence.
"Further recommendations of the Committee relate to membership of supervisory boards, and these amendments will aim to foster the independence of supervisory boards by laying down mandatory and non-binding provisions to achieve a better composition of supervisory boards", concluded the Minister, adding that the amendments previously proposed by the Legislation Committee were adopted.
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