The European Commission has dropped a plan to force firms to give 40 percent of non-executive board positions to women in favour of a less drastic obligation to favour female candidates where they are equally qualified.
The quota proposal had run into opposition from a number of countries and from large firms.
Commission lawyers said it was "problematic" for the EU 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 favour "the underrepresented sex" from 2016 onward until a share of 40 percent is reached.
Member countries would have the power to determine and impose sanctions on firms that did not obey the rule.
European commissioners are scheduled to vote on the proposal tomorrow. 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.
A number of commissioners were known to have reservations about the original quota plan, among them Irish commissioner Máire Geoghegan-Quinn and Dutch commissioner Neelie Kroes.
In favour of quotas are Luxembourg commissioner Viviane Reding, who launched the proposal, and several male commissioners including Finnish commissioner Olli Rehn from Finland and Michel Barnier of France.
A working draft of the law says that companies must change their hiring policies by 2016, so that they favour a woman over a man with the same qualifications until at least 40 percent of non-executive board members are female.
Reuters