We invite you to read the column written by our Legal & Business Director, Stephanie Cruz, on the implications and opportunities surrounding the implementation of the “More Women on Boards” Law.
In exactly one year’s time, companies will be required to submit information regarding the identity and gender of each member of their board of directors. Given that boards typically renew their membership in April, now is a good time to incorporate the requirements of the new regulation governing women’s participation on boards into their composition.
Law No. 21,757 aims to increase the number of women on the boards of large Chilean companies (public and special corporations regulated by the CMF). The major change is that it introduces a gradual quota, which starts as a strong recommendation (not mandatory) but will become more stringent over time.
The goal is to ensure that no single gender (male or female) is overrepresented on boards. The maximum limit for the more prevalent gender will gradually decrease to ensure space for diversity. Starting in 2026 (the first three years), the law requires a maximum representation of 80% for a single gender; between 2029 and 2031, a maximum of 70%; and starting in 2032, a maximum of 60% representation for a single gender.
If a company fails to comply with the law, it must publicly explain to the CMF why it did not meet the requirements within five business days of the election. This explanation must also be included in its annual report. Pressure from public opinion and investors is the main driving force at this stage. The CMF will then publish a list of companies that do comply, recognizing their commitment to equity. If the market does not react and gender parity indicators do not improve after 6 years (by 2032), the CMF may impose a temporary mandatory quota on companies that have fallen behind.
Why is this important? Because companies that comply will be considered “promoters of gender equality,” which will give them competitive advantages in public tenders, translating into more and better business opportunities. Additionally, companies that move toward greater diversity on their boards will generate higher profitability and lower risks, making them more attractive to investors.
Compliance with this law improves a company’s ESG profile, making it easier to attract international capital and access credit on better terms. Likewise, compliant organizations will attract and retain top talent.
At the societal level, compliance with this law will serve as a source of inspiration for future generations, as women in leadership positions create powerful role models that inspire girls and young women to aim for the highest goals.
The main obstacle to progress lies in a cultural shift. In other words, there is a risk of merely meeting numerical targets without truly capturing the real value of diversity on a board of directors. At this point, it is essential to work on eliminating unconscious biases among board members. It is also crucial for companies to invest in mentoring programs that prepare women for leadership roles.
Furthermore, it is impossible to achieve positive results from this regulation without continuous oversight by the CMF, so that companies understand the importance of this initiative.
This law should not be viewed as just another administrative obligation, but rather as a concrete opportunity to modernize corporate governance in Chile. The fundamental question is whether companies will simply meet the quota or whether they will be able to leverage this regulation to build more diverse, professional, and strategic boards.
Because the true competitive advantage lies not in numbers, but in the quality of the decisions made when diversity exists.
Column written by:
Stephanie Cruz | Legal & Business Director | scruz@az.cl
