Over 900 firms still to appoint women on to their boards
Many companies have complied with the norm by picking women from promoter’s immediate or extended family
New Delhi/Chennai: As many as 904 publicly traded companies are still to appoint women on to their boards, and many others have complied with the requirement that they have at least one woman director by picking those who are part of the promoter’s immediate or extended family.
India’s stock market regulator has, in keeping with the new Companies Law, mandated that every publicly listed company have at least one woman director on its board. The deadline for this is 1 October.
According to data from Prime Database, 904 companies had not yet appointed a woman director on their board till 30 June.
“Going by past experience, companies believe the deadline for compliance will be extended, which is why we have not seen much pick-up in the number of appointments. We may see increased activity in the last week of September,” said Prime Database managing director Pranav Haldea.
The core of the problem is that both companies and women are choosy about board appointments.
“Companies are not comfortable with someone who is totally new to the business, even if they are well qualified,” said Haldea. And women are wary about board appointments due to the increased liabilities the new Companies Act places on directors, and are hesitant to accept. (To be sure, men tapped for board positions are equally wary).
In the four-and-a-half months since the Securities and Exchange Board of India (Sebi) announced its deadline, only 91 women have been appointed to 97 directorship positions in 94 companies, according to Indianboards.com, a joint initiative of the National Stock Exchange (NSE) and Prime Database,
Of these 94 companies, 16 firms already had a woman on the board before the Sebi guideline was announced, implying that only 78 firms have since complied with the requirement.
“Within these 78 companies, 74 women have been appointed to 80 directorship positions. Significantly, at least 19 of these 80 directorship positions, or nearly one-fourth, have been filled by appointing women belonging to the promoter group,” Haldea said.
“These women shall have the same voice as the promoter, defeating the very purpose of genuine (independent) gender diversity,” he added. Further, 18 of the 80 positions are non-independent.
“This is also reflective of the shortage of talent in senior management. The root of this problem lies in the fact that few women opted for corporate careers 20-30 years ago. In the 1980s, only about 10% of MBAs in the country were women, so it is a domino effect,” says Rajiv Krishnan, partner and leader (people and organization) at audit and consulting firm EY.
Among the companies that have filled the vacancies by naming women related to the promoters are Reliance Industries Ltd (Nita Ambani, wife of chairman Mukesh Ambani); Asian Paints Ltd (Amrita Amar Vakil), Godfrey Phillips India Ltd (chairman K.K. Modi’s wife Bina Modi), Kirloskar Oil Engines Ltd (Gauri Kirloskar, chairman Atul Kirloskar’s daughter), and Raymond Ltd (Nawaz Gautam Singhania, wife of Gautam Singhania).
It is also interesting to note that 59 of the 74 women (appointed in these 78 companies) are first-time appointees to the board of a listed company. “However, of these 59 women, 15 women (holding 17 directorship positions) are from the promoter group and a further 18 women (holding 18 directorship positions) are non-independent, thus leaving only 26 women (holding 28 directorship positions) who are apparently independent,” Indiaboards said in its report.
Among women directors, Housing Development Finance Corp. Ltd (HDFC) managing director Renu Sud Karnad has the maximum number of board positions at eight, of which five are as an independent director, while in terms of companies, Apollo Hospitals Enterprise Ltd (four) has the highest number of female directors, though none are independent (all are daughters of the chairman Pratap Reddy).
On an aggregate basis, there are 8,987 persons occupying a total of 11,527 directorships in NSE-listed firms. Of these, only 673 positions are held by women, which is just 5.8%. Under the Companies Act, 2013, every listed company and those public firms having paid up share capital of Rs.100 crore or more should have at least one woman director on their board. Sebi incorporated this law into its own norms in February 2014.
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