By Claire Davenport
BRUSSELS (Reuters) - The European Commission has dropped a plan to force firms to give 40 percent of non-executive board positions to women in favor of a less drastic obligation to favor female candidates where they are equally qualified, an EU source said on Tuesday.
The quota proposal had run into opposition from a number of countries, led by Britain, and from large firms.
Commission lawyers said it was "problematic" for the European Union to impose strict quotas, though it could instruct companies on how to hit quotas.
The Commission estimates that women currently account for fewer than 15 percent of non-executive board positions in companies with more than 250 staff.
The new proposal would now oblige these companies to favor "the underrepresented sex" from 2016 onward until a share of 40 percent is reached, the source said, speaking on condition of anonymity.
Member countries would have the power to determine and impose sanctions on firms that did not obey the rule.
The European commissioners are scheduled to vote on the proposal on Wednesday. If a majority approve it, the plan will then be voted on by the European Parliament and the 27 member countries.
An earlier version of the proposal, announced by the EU executive in September, would have required the companies to have women in at least 40 percent of their non-executive board positions by 2020.
Norway, which is not a member of the bloc, has successfully enforced a 40 percent quota since 2009, although critics say this has been achieved in part thanks to a small number of women holding non-executive positions in multiple companies.
Meanwhile members of the European Parliament are fighting to rescind Yves Mersch's nomination to the European Central Bank's Executive Board because they want a woman to fill the seat, one of six.
APPOINTED FOR THE QUOTA?
Men dominate boardrooms and public posts in the European Union, but many women who have risen through company ranks resent quotas because they give the impression that women have not been promoted on merit.
Among women commissioners, digital affairs commissioner Neelie Kroes of the Netherlands and Climate Action Commissioner Connie Hedegaard of Denmark oppose quotas.
But Justice Commissioner Viviane Reding, from Luxembourg, launched the proposal, and several male commissioners are in favor, including Economy Commissioner Olli Rehn from Finland and the finance commissioner, Michel Barnier of France.
Britain has been the most outspoken critic of EU-imposed quotas, with Business Secretary Vince Cable arguing that London's current voluntary approach was effective.
The British upper house concluded last week that the original Commission proposal would not "address the root causes of inequality". The share of women on the boards of British-listed companies rose to 12.5 percent in 2010 from 7 percent in 1999.
"The UK welcomes the Commission's decision not to impose mandatory quotas for women on boards," a British government spokeswoman said. "We have consistently argued that measures are best considered at national level."
A working draft of the law says that companies must change their hiring policies by 2016, so that they favor a woman over a man with the same qualifications until at least 40 percent of non-executive board members are female.
"The burden of proof is on the companies," the source said.
(Editing by Kevin Liffey)