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MUMBAI : Institutional Investor Advisory Services (IiAS), a proxy advisory firm in a report on Monday said that regulatory nudge has ushered in gender diversity in company boards. The representation of women has increased to 17% year-on-year, from just 6% in March 2014. Corporate India has also bellied the initial fears that a largely promoter family owned corporate India would check-the-box by appointing family members. IiAS also highlighted that while the board level gender diversity agenda is being addressed, the lack of women in the rung below the board will continue to pose a gap.

Women make up 17% of board members

Source: IiAS Research, PRIME Database group
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Source: IiAS Research, PRIME Database group

Women directorship in listed company boards saw a marked improvement since Companies Act 2013 made their representation mandatory. As of March 2020, Nifty 500 companies had 777 women directors out of the total 4657 directors. The act made it mandatory for boards to have at least one-woman director from 1 April 2014. This was soon followed by Securities and Exchange Board of India (Sebi) mandating it in 2015.

In a further step towards strengthening gender diversity and following the recommendations Kotak panel, Sebi mandated that the top 500 (by market capitalization) companies were required to appoint at least one woman as an independent director from 1 April 2019. Companies now have more women directors on the board, instead of having just one woman as an independent director.

Almost 44% of Nifty 500 companies have two or more women directors on their boards. Apollo Hospitals Limited, Godrej Agrovet Limited, Godrej Consumer Products Limited and India Cements Limited have five women on their boards, while there are seven other companies which have four women directors on their board.

MNCs have higher women representation

Source: IiAS Research, PRIME Database group
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Source: IiAS Research, PRIME Database group

MNCs have a higher women representation in the board of directors at 19%, while PSUs trail behind at 11%. From the 777 women directors on board, 71% (548) are independent directors. Of the 13 companies that do not have any women directors, 12 are PSUs. Just eight of the 71 PSUs in S&P BSE 500 have boards that comprise more than 20% women.

India Inc has been discerning in choice of women directors

Source: IiAS Research, PRIME Database group
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Source: IiAS Research, PRIME Database group

Corporate India has reacted well to the requirement of adding women to the board. Instead of simply asking family members to step in to check-the-box, India Inc has been discerning in its choice of women directors.

From the women directors on board 71% are independent directors. Of the total directorships held by women, just 71 are held by promoter family members in a non-executive capacity. These 71 directorships are across only 65 companies (13% of Nifty 500). This list of 71 non-executive directorship held by women belonging to the promoter family include: some of these are Rajashree Birla, Nita Ambani, Tanya Dubash, Meher Pudumjee, and Nisaba Godrej.

Board leadership continues to remain a challenge

Source: IiAS Research, PRIME Database group
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Source: IiAS Research, PRIME Database group

Among the Nifty 500 companies 491 had Chairpersons on 30 March 2020 – of these, only 18 companies had women as Chairpersons. The Nomination and Remuneration Committee (NRC) with 18% women members is ahead of the CSR committee with 16% women representation and the Audit committee with 16%. In 2017 women representation on CSR, NRC, Audit Committees was 16%, 13% and 12% respectively.

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