UPDATE 1-EU delays vote on quotas for women in the boardroom

Claire Davenport

(Updates with delay of proposal)

STRASBOURG, France, Oct 23 (Reuters) - The European Commission on Tuesday postponed a vote on a plan to force companies to allot 40 percent of their board seats to women by 2020 as lawyers questioned its legality under EU rules.

Viviane Reding, the EU commissioner for justice and fundamental rights, had planned to launch the initiative to tackle gender inequality on company boards but in a last-minute decision her Commission peers decided to delay their vote for a month.

A Commission source said commissioners were jittery about approving the plan after lawyers cast doubt over its lawfulness. The official said the draft was being revised right up until the aborted vote.

``Many were surprised not to receive a draft proposal that could be described as lawful according to our own legal service,'' the source said.

Reding would need a simple majority of the 27 commissioners to have the plan approved. Then it would go to the European Parliament for amendments before it could be implemented.

Early drafts of the plan to oblige companies to reach a 40 percent female boardroom quota by 2020 -- or face sanctions -- were deeply unpopular with many EU countries.

Britain has been the plan's most outspoken critic, with Business Secretary Vince Cable arguing London's current voluntary approach was effective.

Many argue quotas are damaging rather than beneficial to women's rights because women would not be hired on their merit but as part of a box-ticking exercise.

The EU's legal service said countries cannot be obliged to reach the 40 percent female quota, although they could do more to address gender bias on boards.

But Reding has argued quotas are necessary.

Men represent over 85 percent of all executive posts in the European Union, an imbalance some prominent women in EU institutions are trying to correct. Supporters of Reding's plans say men could also benefit from the corporate gender push.

If a man who is away from work on paternity leave for a year is up against a woman in a job interview who had been in work for a year, then the man could get priority, one official said.

But while some other female commissioners say they agree with the proposal's objective, some say its unwieldiness could kill off much-needed debate on gender inequality.

Five of the commission's nine female commissioners are against the proposal, a commission official said, while several of the male commissioners, including Finland's Olli Rehn and Michel Barnier of France, are in favour.

Dutch commissioner Neelie Kroes is set to vote against it. Her career has spanned several company board positions and two tenures as commissioner.

``Europe should not do what others can do better,'' Kroes said recently, insisting that quotas should be a national prerogative.

Despite the difficulties Reding's proposal faces, the gender debate has been high on the agenda of other EU institutions.

Members of the European Parliament economics committee on Monday rejected the appointment of Luxembourg's Yves Mersch to the ECB Executive Board, because no women had been considered for the post. While Mersch is still expected to get the job, some members of the parliament believe their stand has put the issue under the spotlight.

(Reporting By Claire Davenport; editing by Rex Merrifield, Rosalind Russell)