German listed companies must from now on have at least one woman on the board of directors (SB).
The German government parties CDU and SPD voted for the women's quota on Wednesday.
The legislation will end years of tugging about a possible quota.
The new regulations for listed companies are as follows: a board of directors consisting of more than three persons must have at least one woman.
If the German state has a majority stake in a company, a board with more than two people must include one woman.
The women's quota was held back for years by the CDU, the party of Chancellor Angela Merkel.
The government party did change tack now, because previous regulations that had to help women in top positions had insufficient effect.
"This law is a milestone for women in leadership positions," said Family Minister Franziska Giffey of the ruling party SPD on Wednesday.
"We have seen year after year that hardly anything has been changed on a voluntary basis and progress is very slow."