Mumbai: Many companies have opted to induct family members, including wives and daughters, as directors in a last-minute dash to meet a regulatory deadline that require stock market listed firms to appoint at least one woman director on their boards.
Hundreds of companies were still to appoint a woman to their boards by the deadline that ended Tuesday, experts tracking the issue told HT.
“Till yesterday (Monday), 310 companies (of the 1,479 listed on the National Stock Exchange) have not yet complied with the norm,” said Pranav Haldea, MD, Prime Database, a group that tracks listed firms.
The Securities and Exchange Board of India (Sebi) had asked companies to appoint at least one woman director according to rules set by the Companies Act 2013. The move was aimed at improving gender diversity in boardrooms of a country that ranks a lowly 120 among 131 nations in terms of female labour participation according to the International Labour Organisation (ILO).
While compliance is vital, boards of various companies such as Reliance Industries, Raymond, JK Tyre, Apollo Hospitals, UB Group have relatives as directors.
“Companies have been going about the process (of appointing women directors) today (Tuesday) and trying to fill the position. The final number will be known on Wednesday. It is unlikely that all companies will be able to complete the process,” Haldea added.
Analysts said many companies were not comfortable with changing their boards’ composition. Also, with the government limiting to seven the number of companies that any person can serve as an independent director, firms have had to jostle against each other to tap from a limited talent pool.
Sebi, which had extended the original deadline by six months from October last year, has warned of strong penalties if companies fail to comply.
Last week, Sebi chairperson UK Sinha said he found it “very shameful” that so many companies still had not inducted women into their boards.
“This can’t be done overnight. It takes about three or four years to train someone to be a director on a company board. Many women are reluctant because it’s a huge responsibility,” said Gita Piramal, noted business historian.
“The inability to recruit just 1,500 women (the minimum number needed for all listed companies), shows a poor track record,” said Poonam Barua, founder chairman of WILL Forum India, which seeks to set the agenda for women executives and make a case for leveraging their talent pool. “Boards are busy looking for people like them. They should instead bring in diverse groups for sparking innovation which would push for growth in the company.”