Companies comply with Sebi order on women directors and appoint their relatives to the boards
Prahlad Rao | March 31, 2015
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.
Maharashtra has modified guidelines on restrictions imposed to curb the spread of Covid-19, and put out clarifications on do Do’s and Don’ts to be followed under its ‘Break the Chain’ orders. Starting Saturday, Rapid Antigen Tests are allowed for non-vaccinated
Raising concerns about the “leaks” of aspects of an ongoing investigation into incidents leading to political turmoil in Maharashtra, former chief minister and senior Congress leader Prithviraj Chavan has said the NIA is selectively leaking info on the case and it is a serious matter. &n
Maharashtra, suffering from a heavy number of fresh cases every day and complaining of vaccine shortage, has replied to the union health minister criticism and blamed the centre for the situation. “Union Health Minister Shri Harsh Vardhan ji needs to be reminded that Maharashtra tops t
Amid tighter movement restrictions as the city and the state continue to battle a consistently rising trajectory of fresh Covid-19 cases, Mumbai civic authorities on Thursday allowed 24-hour home deliveries of food and essential supplies through online service providers like Zomato and Swiggy on all days o
India recorded a new high of 1,15,736 daily Covid-19 cases with Maharashtra bearing nearly half of the load, as the state and the centre traded charges for the first time since the outbreak. State leaders sought to put part of the blame on the centre while union health minister Dr Harsh Vardhan slammed the
Anil Deshmukh is reportedly considering approaching the supreme court Tuesday to challenge a Bombay high court order that had forced him to quit as home minister of Maharashtra a day earlier. Deshmukh tendered his resignation to governor Bhagat Singh Koshyari, citing moral grounds, after the