(CN) - Foreign companies must hire more female board members under a new proposal aimed at "cracking Europe's glass ceiling" that the European Parliament advanced Wednesday.
Though the share of women sitting on company boards has risen across Europe in recent years, it currently stands at just 16.6 percent.
The new law, which was proposed by the European Commission last year, would force publicly traded companies to have at least 40 percent of their boards be made up of women by 2020. Government-owned businesses must comply by 2018, and failure will result in companies being barred from bidding on government contracts and receiving stimulus funds.
While the proposal excludes small- and medium-sized businesses, it directs member states to give incentives that will improve female representation within those companies.
"Today's European Parliament vote is a historic moment for gender equality in Europe," EU Justice Commissioner Viviane Reding said in a statement. "The directly elected European Parliament has made its voice heard loud and clear: Europe needs strong rules to tackle the gender imbalance in company boardrooms. It has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs. The Council of Ministers, the EU's second Chamber, should now rise to the challenge and make swift progress on this draft law, which places qualification and merit center stage."
To become law, the proposal requires approval by the EU member states on the Council of the European Union. A vote in the council could come as early as Dec. 10.