European politicians have done a complete U-turn on plans mooted earlier this year requiring listed companies in the region to hire female executives onto their boards, in an effort to boost the numbers of women in senior management, or face sanctions if they failed to do so.
According to the Financial Times the revised legislation still recommends a 40% quota but companies will no longer face sanctions if they do not comply with the rules.
The initial suggestions, pushed for by the EU justice commissioner Viviane Reding, have also been revised to give member states the room to introduce fairer methods to encourage more women being hired into board roles.
The EU's decision - in light of statistics which show that women only fill 13.7% of board positions among listed companies - comes as the legal service found that mandatory gender caps contravened other treaties.
Reding admitted she would have preferred a 'stronger proposal' and had been forced to water down the plans to obtain approval.
'I continue to believe that the case-law of the court of Justice of the European Union allows a legally binding quantitative target in favour of the under-represented sex if based on equal qualification, as initially proposed.
'However, the co-signatories of the proposal and I also understand the concerns expressed by several of you, and we are willing to move towards a compromise text,' she said.
Commenting on the new plans, Audrey Williams, partner and discrimination law expert at global law firm, Eversheds, said that getting the EU Commissioners to agree on the proposal is only the first step.
'Before any recommended European Directive in this area can become law it has to be approved by the Parliament and the Council, where the proposal is likely to be met with polarised views.
'Much of the pressure on the Commission has come from the Parliament, which has been pushing for legislation in this area for some time. The parliament could well vote to beef up the proposals, re-introducing the mandatory quotas and sanctions on employers that news reports suggest Viviane Reding has been forced to drop in favour of a 40% 'objective'.
'If that happens, any new law is likely to be blocked by member states in the EU Council given that ministers in a number of countries have already said they will oppose any attempt to impose binding quotas on companies and even the Commission's own lawyers have advised that compulsory quotas and sanctions appear to contravene the EU's own anti-discrimination laws,' said Williams.
