Women on board: Indian companies’ board room is now family room

Companies comply with Sebi order on women directors and appoint their relatives to the boards

prahlad

Prahlad Rao | March 31, 2015


#Sebi   #companies   #women   #business  

The intention is good but the compliance seems to be skewed and defeats the purpose. In February 2014, market regulator Securities and Exchange Board of India (Sebi) had issued a directive asking companies listed on stock exchanges to have at least one woman on the board of directors by October 2014, a deadline that was later extended to March 31 this year.  But over 50% of the companies, instead of going for professionals, have elevated women relatives of their promoters to their boards.


India has over 15% working women and finding a professional in this talent pool should not be difficult process. However, Indian companies are not interested in gender diversity or in promoting independent thinking women. They opt for wives, sisters and other relatives of their owners to comply with Sebi order, at least on technical ground.


The market regulator has warned of necessary action if companies failed to comply with its directive of appointing at least one woman on their boards. With the deadline about to end, nearly 300 companies are scrambling to appoint a woman director on their boards.


“There are still a lot of companies who are non -compliant with Sebi guidelines. It is surprising that still a large number of companies haven’t found a competent women director. Such non-compliance should be condemned,” said UK Sinha, chairman, Sebi while addressing a capital market seminar organised by CII.


The Sebi chairman said that all non-compliant companies would face penal action as per Sebi provisions. The Sebi Act empowers it to take multiple actions against erring companies, which may include imposition of monetary penalty on companies and their promoters or directors, freezing of promoters shareholding and debarring the company and its executives from accessing the capital market.


If the private sector is resorting blatant nepotism by appointing relatives to the board, the public sector undertakings are no better. They are yet to find women members for their boards.

There is a strong case for balanced boards. Women board members bring better understanding of their customers and stakeholders. They bring fresh perspectives, new ideas, vigorous challenge and broad experience. This in turn leads to better decision making.

According studies, the companies with more women on their boards were found to outperform their rivals by over 40% in sales.

This is not just a gender numbers game. It is about the richness of the board as a whole, the combined contribution of a group of people with different skills and perspectives to offer, different experiences, backgrounds and life styles and who together are more able to consider issues in a rounded, holistic way and offer an attention to detail not seen on all male boards which often think the same way, and sometimes make poor decisions.

Gender diversity means: Better decision-making as a result of directors having a range of experiences and backgrounds. Women take their non-executive director roles more seriously, preparing more conscientiously for meetings. Women ask the awkward questions more often, decisions are less likely to be nodded through and so are likely to be better.

In August, 2013, the parliament approved the new Companies  and ntroduced the concept of women directors on the boards of listed companies and some other class of the companies in an effort to improve governance. The objective was:  Board diversity in terms of gender, professional experience and geographic experience. To foster creativity and generate new ideas; Sustainable and meaningful change in the business and image of the company by showing their seriousness towards gender sensitiveness;  Improves the depth of its strategy development.

In 2003, Norway was the first country to pass such a law, mandating that public companies achieve 40 percent representation of women on their boards within five years.

Comments

 

Other News

Covid-19: India’s recovery rate improves to 59.43%

Even as Unlock enters the second phase, the number of Covid-19 infections continues to rise to record levels and India remains No 4 in the worldwide list, yet there is glimmer of hope: its recovery rate is also rising in tandem. There are 1,27,864 recovered cases more than the active Covid-1

Coming soon at a station near you: private trains!

A long-debated idea is finally coming to fruition as the Indian railways has decided to join hands with the private sector, in running some train services to begin with. The ministry of railways has invited ‘request for qualifications’ (RFQ) for private participation for operatio

A place of local democracy in pandemic governance: The case of Mumbai

Democracy in India is now taken for a fact, with an unstated assumption that all our institutions are democratic and hence often our successes and more often failures are attributed to ‘democracy’. However, a key frontier where democracy remains a challenge is that of local governments and that

Why TikTok, other apps were banned: “Engaged in anti-India activities”

India, facing China’s aggressiveness at border, has banned 59 smartphone apps, including TikTok, as they were indulging in activities harmful to India’s sovereignty and integrity. The reason cited was: “in view of information available they are engaged in activities which [

Gaganyaan mission not affected by pandemic

The launch of India’s first human space mission, ‘Gaganyaan’, will not be affected by Covid-19 and preparations are going on in the right direction even amid the pandemic. This was disclosed by minister of state (independent charge) development of north eastern region (DoNE

How India is quietly resetting its economic engagement with China

For all intents and purposes, India is going to reset its relations with China and a subtle hint to this regard has been given by the Narendra Modi government after the deadly June 15/16 night face-off between the Indian army and PLA troops in the Galwan Valley in which 20 Indian soldiers lost their lives.



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter