The law will apply to publicly traded corporations, as well as special corporations such as banks, pension fund administrators, and insurance companies.
On July 23, the National Congress approved the “More Women on Boards” bill, an initiative that seeks to increase female representation on the boards of companies that play a key role in the country’s economy. With this law, Chile takes an important step toward gender equality in business leadership positions, aligning itself with the standards promoted by the OECD.
The law will apply to publicly traded corporations, as well as special corporations, such as banks, pension fund administrators (AFPs), and insurance companies. Its objective is to correct a scenario that, to date, shows discouraging figures: according to the Fifth Report on Gender Indicators in Companies in Chile, only 15.9% of board positions are held by women, and more than 40% of companies regulated by the CMF do not have any women on their boards of directors.
The new regulations establish a gradual and flexible implementation model based on suggested participation quotas. During the first three years after the regulations come into force, it will be encouraged that neither gender exceeds 80% of the seats on the board. Then, between the third and sixth years, that threshold will drop to 70%, and finally to 60%. In other words, by the sixth year, no board of directors is expected to be composed of more than 60% of people of the same gender.
The Financial Market Commission will play a key role in monitoring compliance. If, after six years, progress is insufficient, for example, if more than five percent of companies do not have any women on their boards, a transitional regime of mandatory quotas will be activated for four years. In that scenario, alternate directors must be of the same gender as the incumbents, with the aim of correcting gender imbalances.
In addition, a transitional Advisory Committee will be created, made up of representatives from the business world and organizations that promote equality, which will accompany the Ministries of Finance, Economy, and Women in the implementation of the law.
The law still needs to be enacted by the President of the Republic. If no objections are received within the legal deadline, it will be deemed approved and will come into force in the coming weeks. Companies can therefore already begin to prepare.
Beyond its regulatory effects, this law marks a significant change in Chilean corporate culture. It represents progress in terms of diversity and inclusion, and complies with OECD principles, which emphasize that gender equality promotes economic growth, productivity, competitiveness, and long-term sustainability.
For more information on the “More Women on Boards” Law, please contact our Corporate and Business team:
Álvaro Rosenblut | Partner | arosenblut@az.cl
Stephanie Cruz | Legal & Business Director | scruz@az.cl
Vicente Martínez | Senior Associate | vmartinezw@az.cl
Camila Holley | Associate | cholley@az.cl
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