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Oslo's boardroom battle

Business in Norway is resisting a government plan to introduce quotas for female directors

An initiative by Norway's government to boost the presence of women in company boardrooms has mired it in an argument about state intervention in business. The plan - to force Norwegian companies to give 40 per cent of the seats on their boards to women - has been attacked by business leaders.

Norway's government been accused before of meddling in business. Last year, for example, it blocked an attempt by Sampo, the Finnish financial services group, to buy Storebrand, Norway's biggest insurer, on the premise that Norwegian banks know Norwegians best.

When the current centre-right government took over last October it seemed keen to improve this record. It announced a review of corporate governance, including how to separate the state's roles as both regulator and shareholder in companies in which it holds a stake.

However, two months ago, Ansgar Gabrielsen, trade and industry minister, announced his intention to increase female representation on Norwegian company boards. Last Thursday he detailed the quota plan, under which state-owned companies have until 2003 to meet the 40 per cent quota, while listed companies have until 2005.

Business leaders have reacted angrily. "The dangerous thing is not the number of women but that the state wants to exert [its] ownership right," says Eivind Reiten, chief executive of Norsk Hydro, which is 44 per cent state-owned.

"Norway will stand out as an odd country in the international markets," warned Svein Aaser, chief executive of Den norske Bank, Norway's largest bank and 48 per cent state-owned, at a government hearing into gender equality last week. The quota could lead to "share dumping", he added.

The point is echoed by Kjell Roland at Econ, a Norwegian centre for economic analysis. He says the quota system could deepen the discount - currently 30-40 per cent - on the share prices of companies in which the government has a stake.

Norwegian women seem divided over the plan. "If you had asked me 10 years ago, I would have replied straight out no [to quotas]," says Bente Rathen, executive vice-president at Gjensidige Nor, one of Norway's largest financial institutions. "But I'm older and I've seen how slowly the development has gone. I'm more worried about women's self-confidence than share prices."

"We think it is positive to get more women on the board," says Christina Stray, legal counsel at the Oslo stock exchange. "However, we think the methods proposed are dramatic and threaten shareholder democracy."

Norway has a record of promoting sex equality, particularly in government. Since Gro Harlem Brundtland became Norway's first female prime minister in 1981, 40 per cent of cabinet members have been women.

Businesses have also regularly appointed women to board positions. On average, women already make up 40 per cent of the boards of state-owned or partially state-owned companies.

However, the private sector's record is poorer. According to Okonomisk Rapport, a financial magazine, last year women had only 7 per cent of the seats on the boards of Norwegian listed companies. By contrast, women comprised 12.4 per cent of the boards of Fortune 500 companies, and 87 per cent of the Fortune 500 had at least one woman on the board, according to US research group Catalyst. In Norway, nearly half of the top 250 companies have no women at all.

Some say this is because women are not big shareholders and therefore not the decision-makers in appointing boards. Others say there are too few women to fill Mr Gabrielsen's quota.

Yet Lena Nilsen at the Norwegian Gender Equality Centre estimates that there are 2,600 women willing to take leadership roles or board positions. "There are women," she says. "We just have a marketing problem."

Some believe the plan to put more women in boardrooms may be an attempt by the centre-right government to win public support at a time when Norway's traditional ruling party - Labour - is losing popularity.

Meanwhile, Mr Gabrielsen is playing down the likely impact of the quota. He stresses that the government will not impose it unless companies fail voluntarily to reach the target by the deadlines. Moreover, the quota will apply only to the 650 largest of Norway's 140,000 private companies.

Increasing female representation in boardrooms is in companies' interest, he says: "It is empirically proven that companies with female board members have better results."