The new gender balance law introduces significantly stricter requirements for gender representation on boards in large listed companies in Denmark. No later than 30 June 2026, the underrepresented gender must account for at least 40% of board members. For a number of companies, this will require concrete changes in both board composition, recruitment processes, and governance.
Although the law only applies to certain listed companies, many organisations are closely monitoring developments. The requirements form part of a broader European movement towards greater transparency and diversity in executive leadership and boards – an area that is increasingly prominent in both ESG assessments and investor expectations.
In this article, we review what the new requirements for gender balance on boards entail, which companies are covered, and which steps boards, executive management, and HR should already take now to be ready for 2026.
The key takeaways from the gender balance law
The gender balance law marks a shift from voluntary targets to more binding requirements for a number of large listed companies in Denmark. Whereas companies previously could set their own ambitions and timelines for gender representation in leadership, the law now establishes concrete minimum requirements for board composition.
The law was adopted by the Danish Parliament on 12 December 2024 and applies to financial years starting on or after 1 January 2025. The key change is that listed companies must ensure that the underrepresented gender accounts for at least 40% of board members, but no more than 49%, by 30 June 2026. The requirement applies to the board as a whole.
It is estimated that approximately 50–60 Danish listed companies will be directly affected by the law. These companies must not only actively work on gender balance at board level but also ensure that the selection process for new board members is transparent and based on objective criteria.
Failure to meet the gender balance requirement does not automatically trigger a sanction. However, companies that do not reach the target must be able to document that they have adjusted their recruitment processes and are working systematically to improve balance. In addition, failure to report or absence of targets may result in fines under company and financial reporting legislation.
For many boards, this means that recruitment processes and governance around board appointments will become increasingly important. Companies must to a greater extent be able to document how candidates are assessed and which criteria form the basis for selection.
Background to gender balance requirements on boards
The gender balance law should be seen in the context of a broader European and international development, where diversity in executive leadership and boards is increasingly considered part of good corporate governance.
From voluntary targets to binding requirements
Since 2013, large Danish companies have been required to set targets for the share of the underrepresented gender in management and to formulate a policy to increase representation. However, these rules were based on companies’ own targets and timelines.
Evaluations in the early 2020s showed that progress was slower than expected. At the same time, Denmark ranked relatively low in international comparisons of gender balance in leadership compared to several other Nordic and European countries.
EU directive behind the gender balance law
The Danish law implements EU Directive 2022/2381, which aims to promote a more balanced gender representation on boards of large listed companies in the EU.
The directive was adopted in November 2022 and was to be implemented in member states by 28 December 2024. With the Danish gender balance law, the requirements are now incorporated into Danish company law.
More than an equality issue
Although the law originates from a desire for greater gender equality, the discussion around gender balance on boards today also concerns governance and value creation.
Several international analyses suggest that boards with greater diversity often have broader perspectives in strategic decision-making, better risk assessment, and a stronger culture of discussion. As a result, gender balance is increasingly included in investors’ assessment of companies’ ESG profiles.
Which companies are covered by the gender balance law?
The gender balance law does not apply to all Danish companies, but to a defined group of listed companies.
The law applies to public limited companies whose shares are admitted to trading on a regulated market and that meet at least one of the following criteria:
- at least 250 employees, and
- annual revenue exceeding EUR 50 million, or
- a total balance sheet exceeding EUR 43 million
The assessment is made at company level. This means that a listed parent company may be covered by the rules even if several of its subsidiaries are not.
Companies outside the scope of the law
A number of smaller listed companies fall below the thresholds and are therefore not directly covered by the gender balance law.
In practice, however, many experience increasing pressure from investors, banks, and other stakeholders to work more systematically with diversity in leadership. At the same time, gender balance is often included as part of companies’ ESG reporting and employer branding.
As a result, several companies that are formally exempt still choose to follow the principles of the gender balance law.
When is gender balance on the board considered achieved?
The gender balance law sets a clear definition of when gender representation on a board is considered balanced.
The requirement is that the underrepresented gender accounts for at least 40% and no more than 49% of the total board members. Both shareholder-elected and employee-elected board members are included in the calculation.
The specific implication depends on the size of the board.
| Number of board members | Minimum of underrepresented gender |
|---|---|
| 5–6 | 2 |
| 7–8 | 3 |
| 9 | 4 |
| 10 | 4 |
The requirements of the gender balance law relate solely to gender representation. Other diversity dimensions – such as nationality, age, or functional background – are not directly regulated by the law but are often included in companies’ own governance or diversity policies.
Timeline: key dates in the gender balance law
For listed companies, it is important to be aware of the key milestones in the legislation.
The gender balance law was adopted on 12 December 2024 and applies to financial years starting on or after 1 January 2025.
The new reporting requirements will therefore typically first apply in the annual report for 2025 for companies with a calendar financial year.
The key deadline is 30 June 2026, when the board must comply with the requirement for balanced gender representation.
For companies where the board currently has an uneven gender balance, this means in practice that board elections in 2025 and the first half of 2026 will be decisive in achieving the target in time.
What should boards and executive management do now?
For companies covered by the law, it is essential to begin preparations early. Several of the required changes require planning across multiple board election cycles.
1. Conduct a gap analysis
The first step is to create a clear overview of the current situation. This typically involves mapping gender representation on the board, the composition of executive management, and the talent pipeline at other leadership levels.
The purpose is to assess the extent of change required to achieve balanced gender representation by 2026.
2. Update targets and governance
The board should also review the company’s existing targets and policies for gender representation in leadership. In many cases, it will be necessary to adjust targets to reflect the requirement of at least 40% representation of the underrepresented gender on the board.
Nomination or governance committees should also review procedures for board appointments.
3. Revise the selection process
The gender balance law introduces increased requirements for documenting the selection process for board members. This means that companies should work with clearly defined criteria for candidate assessment and a systematic comparison of candidates.
If two candidates are assessed as equally qualified, a candidate from the underrepresented gender may be given preference.
4. Work with the talent pipeline
In the long term, more balanced gender representation on boards also requires a stronger pipeline of potential candidates.
Companies therefore often work with initiatives such as leadership development, mentoring programmes, and strategic hires to increase representation at senior leadership levels.
5. Start early
If the starting point is a significantly imbalanced board, a single board election will rarely be sufficient to achieve balance.
It is therefore beneficial to start early, allowing the company flexibility in planning upcoming board changes.
What happens if the requirements are not met?
Lack of gender balance on the board does not necessarily trigger a direct sanction.
However, consequences may arise if the company does not meet the legal requirements for process, documentation, and reporting.
Examples of potential consequences include:
- fines for missing targets or insufficient reporting
- requirements to adjust the selection process
- legal cases from rejected candidates
- increased regulatory scrutiny
In practice, this means that boards should ensure transparent and well-documented recruitment processes, where it is clear which criteria form the basis for appointing new board members.
How Compass Human Resources Group can help
For many companies, work with gender balance is closely linked to board recruitment and the development of a strong talent pipeline for future leadership positions.
Compass Human Resources Group works with executive search across the Nordics and conducts recruitment for leadership and board roles across a wide range of industries every year.
We support companies by helping them to:
- identify qualified board candidates in Denmark and internationally
- ensure balanced candidate pools in recruitment processes
- translate legal requirements into concrete role profiles and selection criteria
- strengthen talent pipelines for future board positions
When work on gender balance begins early, it typically provides access to a broader candidate pool and greater flexibility in planning future board appointments.
FAQ: Frequently asked questions about the gender balance law
Does the gender balance law apply to all Danish companies?
No. The law only applies to certain large listed public limited companies.
Other companies are still subject to rules on setting targets for gender representation in management.
What if we already have 40% women on the board?
In that case, the company meets the requirement for balanced gender representation.
However, the board must still document how the balance will be maintained in future board appointments.
Can companies prioritise candidates from the underrepresented gender?
Yes – if candidates are assessed as equally qualified.
However, the selection must be based on objective and documented criteria.
What does the law mean for smaller listed companies?
Although some companies are formally exempt from the law, many still choose to follow its principles.
This can strengthen ESG profile, governance, and employer branding.
Gender balance requirements for boards are also a strategic opportunity
The gender balance law is first and foremost a compliance requirement.
However, for many companies, it is also an opportunity to work more strategically with board competencies, diversity, and governance.
Companies that begin preparations early are typically in a much stronger position – both in relation to legal requirements, investor expectations, and future value creation.
