The Royal Ministry of Children and Equality
EFTA Surveillance Authority
Rue Belliard 35
B-1040 Brussels
BELGIUM
Your ref
Our ref
Date
58512
200701108
30.03.2007
Follow-up to the meeting of 7. February 2007 regarding representation of both sexes on
company boards
Introduction
Reference is made to the follow-up letter to the meeting of 7 February 2007 by the EFTA
Surveillance Authority (hereinafter the Authority) dated 27 February 2007, in which the
Authority requests information from the Royal Ministry of Children and Equality (hereinafter
the Ministry) regarding different aspects of the Norwegian legislation on representation of
both sexes on company boards.
Information requested by the Authority
In the following, the Ministry will respond to the Authority's request for further information.
The numbering corresponds with the numbering used in page 4 of the Authority's letter of 27
February 2007.
1. Translation of Regulation 1205/1998 concerning employees' right to representation in
boards of directors and Work Councils
Unfortunately the above mentioned regulation is not yet translated into English.
2. Determination of whether the gender representation rules laid down in Section 6-11a
(2) of the Public Limited Companies Act apply
The Brønnøysund Register Centre (hereinafter the BRC) is an administrative agency
responsible for a number of national control and registration schemes for business and
industry. The public limited companies are obliged to, on fixed formulas, inform the BRC of
certain changes in the company, i.a. alteration in the composition of the board. In the
formulas, the companies have to indicate which board members are elected by the owners,
and which are elected by the employees. If information given by the company demonstrates
that two or more board members are elected by the employees, and that only one sex is
represented among the employee-elected board members, the BRC will automatically
Postal address
Office address
Telephone
PO Box 8036 Dep
0030 Oslo
Akersgt. 59
+47 22 24 90 90
Vat no.
972 417 793
Department of Family Affairs and
Gender Equality
Telefax
+47 22 24 27 18
Our officer
Hege B.E. Nordstrand
+47 22 24 25 38
dispatch a letter to the company. The company is then given a deadline for their reply. If the
company in their reply inform the BRC that one of the sexes constitutes less then 20 per cent
of the employees, the BRC will rely on this information without further investigations.
In cases where the company does not claim that one of the sexes counts for less then 20 per
cent of the employees, the company will have to make changes in the composition of the
employee elected board representatives so to avoid being dissolved. Consequently, a company
may, theoretically, be dissolved according to the rules in Section 6-11a of the Public Limited
Companies Act, even if one of the sexes constitutes less then 20 percent of the employees, if it
fails to give adequate information to the BRC.
Accordingly, since the BRC does not have information about the companies' employees, it
will not ex officio take steps to investigate the percentage share of women and men among the
employees, but totally relay on the information given by the company.
3. The Ministry's view on the applicability of Directive 76/207/EEC
In relation to the Authority's question no. 3, the Ministry would like to outline some aspects of
the Norwegian system of employee representation in company boards, and the rules
concerning the composition of board members who represent the employees.
According to Norwegian company law, employees have a right (not an obligation)
to be represented in the board of directors of companies that employ more than
30 employees, and more than half of the employees have demanded such representation.
The rules on gender representation apply only to a limited number of companies, namely
public limited companies, and to companies fully owned by the state, cf. the Public Limited
Companies act section 6-11a, and section 20-6 of the Private Limited Companies Act (for
companies owned by the state). In order for these rules to apply in relation to the board
members elected by the employees, the company must employ more than 50 employees, and
the employees must have made use of their right to demand more than two representatives in
the board.
According to Norwegian legislation the board members elected by the employees are
considered to have the same status and responsibilities as members of the board elected by the
shareholders in the general assembly.
It must be pointed out that the rules on employee representation in company boards are part of
the company law, and not regulated by the Act relating to worker protection and work
environment (Act No. 62/ 2005) which regulates the employment relationship. There is no
legislation relating to gender when it comes to composition of employee representative bodies
under what is considered as labour law.
The Ministry wishes to underline the fact that representation in accordance with the Public
Limited Companies Act is non-mandatory, based on the employees demanding such
representation.
Only employed elected by the employees may be elected as a company’s board member. The
employer can’t interfere in which employees are elected to the board. In the Ministry's view,
this clearly separates the Norwegian system of employee board representation from other
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working conditions etc. This is further underlined by the fact that employee board
representation in Norway is governed by company law, and not by labour law.
When it comes to the question regarding applicability of Directive 76/207/EEC, we refer to
the considerations stated in the Ministry's letter to the Authority, dated 19. December 2005,
sections 3.4, 3.5 and 3.6.
4. Factual information on the number of companies where there are board members
elected by and amongst the employees etc.
Statistics from Statistics Norway indicates that by 1. January 2007, 61 of 525 public limited
companies were obliged to have employee elected board members. Only 2 of these companies
had 4 employee elected board members, and none had more than 4 employee elected board
members. Consequently, 59 public limited companies had 2 or 3 employee elected board
members.
Most public limited companies have between 2 and 8 board members in total. Very few
companies have 9 or more board members – by 1. January 2007, only 11 out of 525
companies had 9 or more board members, and only 2 companies had 10 or more board
members on their board. This explains why so few companies have 4 or more employee
elected board members.
Please find the statistics referred to above enclosed.
5. Information on in which situation Section 16-17(3) of the Public Limited Companies
Act may apply
Section 16-17 (3) of the Private Limited Companies Act and the Public Limited Companies
Act applies to all the different situations which are dealt with in Section 16-15 (requirements
regarding the board of directors, the general manager, the auditor and the annual accounts).
The qualifying words for the application of Section 16-17 (3) are "substantial public interests"
("vesentlige samfunnsmessige hensyn"). On page 139 of Ot.prp. nr. 55, this is commented as
follows:
"Det bør som nevnt være mye som skal til for at Kongen eller departementet griper inn mot en forestående
tvangsoppløsning. Slik departementet ser det, bør det være samfunnets interesser i at selskapet fortsetter, og ikke
hensynet til selskapet selv, som er avgjørende for om det gripes inn mot en tvangsoppløsning. Selskapets
egeninteresse i å unngå tvangsoppløsning bør selskapet ivareta selv, ved å sørge for å oppfylle lovens krav.
Departementet foreslår en bestemmelse i aksjeloven og allmennaksjeloven § 16–17 tredje ledd om at Kongen
(departementet) kan beslutte at en forestående tvangsoppløsning ikke skal gjennomføres dersom «vesentlige
samfunnsmessige hensyn tilsier det». I dette ligger at i hvert fall distriktshensyn, hensynet til å opprettholde
arbeidsplasser og hensynet til å kunne opprettholde produksjon av tjenester og produkter som er av avgjørende
betydning for samfunnet, kan være relevante hensyn å legge vekt på. Vesentlighetskravet innebærer likevel at det
må være tungtveiende grunner som taler for at det gripes inn mot tvangsoppløsningen. Som nevnt mener
departementet at bestemmelsen skal tjene som en sikkerhetsventil for ekstraordinære forhold, og at det ikke skal
være kurant at tvangsoppløsninger stanses.
Dersom kriteriet «vesentlige samfunnsmessige interesser» er oppfylt, vil det være overlatt til Kongens (eller
vedkommende departements) frie skjønn om det skal gripes inn. Et selskap som mangler vilje til å etterleve
lovens bestemmelser, kan ikke påregne å bli reddet fra en forestående tvangsoppløsning. I vurderingen vil det
være relevant å legge vekt på hvordan vedkommende selskap har kommet opp i den situasjonen at selskapet er i
ferd med å bli tvangsoppløst. En arrogant holdning til lovens bestemmelser og liten vilje til å rette seg etter
lovens krav kan tilsi en tilbakeholdenhet med å gripe inn. Departementet vil i den sammenheng peke på at
tvangsoppløsningsgrunnene omfatter viktige selskapsrettslige bestemmelser. Plikten til å utarbeide årsregnskap
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og til å ha revisor utgjør for eksempel helt sentrale forutsetninger for adgangen til å drive virksomhet med
begrenset ansvar. Dette tilsier at bestemmelsen praktiseres restriktivt."
In translation this may be read as:
"As mentioned, it should take much before the King or the Ministry intervenes in a forced dissolution. In the
view of the Ministry, it should be the public interest in that the company is continued, and not the interests of the
company itself, that should be decisive for whether it is intervened or not. The company's own interest in
avoiding forced dissolution should be taken care of by the company itself, by fulfilling the requirements of the
law. The Ministry proposes a provision in the Private Limited Companies Act and the Public Limited Companies
Act Section 16-17 third paragraph, stating that the King (the Ministry) can decide that a forced dissolution shall
not be executed because of "substantial public interests" . In this requirement lies, in any case, that interests
regarding the districts, the employment situation and the production of services and products which are essential
for society, may be relevant to give weight to in the considerations. The requirement for substantiality means that
the reasons that speaks for intervention in the forced dissolution, need to have great weight. As mentioned, it is
the view of the Ministry that the provision shall act as a safety valve in extraordinary circumstances, and that it
shall not be an ordinary matter to halt a forced dissolution.
Where the requirement "substantial public interests" is fulfilled, it will be up to the King's (or the relevant
Ministry's) own judgement whether it shall be intervened. A company which lack the will to fulfil the provisions
of the law, can not count on being saved from dissolution. In the considerations it will be relevant how the
company came into the situation that it is about to be dissolved by force. An arrogant attitude to the provisions of
the law and little will to follow the law could speak for reluctance to intervene. The Ministry will in this context
point out that the reasons for forced dissolution include important company law rules. The obligation to have
annual accounts and an auditor is for example absolutely basic requirements for being allowed to run a business
with limited liability. This speaks for a restrictive use of the provision."
Conclusion
The Ministry hopes the information given above will be satisfactory. If the Authority is
in need of any further information, please do not hesitate to contact the Ministry.
Yours sincerely,
Arni Hole
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Hege B.E. Nordstrand