MIFID II on equality and diversity
It is interesting to note how the arguments for securing women board positions in Norwegian public limited companies (PLC), ending in a 2005 amendment to the plc act, differs from the MIFID II requirement for diversity.
In the 2003 proposal for an amendment to the law, the Norwegian government was concerned about the loss in not fully utilising women also as boardmembers, but also stated that introducing more women in board positions would promote better management. Opposing views were that highly qualified (male) candidates would have to yield to less qualified women. Many highly qualified women were vocal in their dislike of the proposal, they wanted to be chosen on merit and not gender. It became a discussion on the quality of the women candidates.
The European Parliament and the Council of EU in the 2014 MIFID II proposition considers diversity very differently. In the introduction (art. 53) they start by stating that “it is necessary to strengthen the role of the management bodies of investment firms”. To achieve this, they continue with the how and why: “To avoid group thinking and facilitate independent opinions and critical challenge, management bodies should therefore be sufficiently diverse as regards age, gender, geographic provenance and educational and professional background to present a variety of views and experiences”.
In Norway of course, the requirement for women on the board stands, but companies regulated under MIFID II must consider diversity more broadly. Not for equality reasons but because the EU authorities insist that diversity ensures stronger management bodies and result in lower risk and a higher level of performance at board level in what is an increasingly complex regulatory environment.
The Norwegian regulation is definite in securing women positions on the board of directors of public limited companies. The ESMA statement is however in comparison to the 2003 proposition, refreshingly modern and better argued.