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Women Directors – A phase of board diversity

Women Directors – A phase of board diversity

Indian constitution enshrines with the basic rule that there should not be inequality. Humans fail to treat other humans at par and most of all there continues a situation that eradication of such gender inequality is highly unavoidable in a country like India. However, the Indian constitution enshrines with provisions which deal with the importance placed for women in workplaces too. And that women do have equal means of livelihood as compared to that of men. Other recognition includes provision for equal pay for equal work carried out by a woman, maternity relief etc. 1

The major reason behind Indian women drop out in employment sector during entry and mid management is family as such i.e. the commitment of marriage and children.

In the last two years there has been an increased interest in board diversity by mandatory appointment of Women Director in Indian companies. The requirement of women director is prescribed in Rule 3 of Companies (Appointment & Qualification of Directors) Rules, 2014 under the Companies Act, 2013.

 

Comparative Analysis- Norway Vs. India

Many fortune 500 companies show a drastic change in the increase in their profits and their further expansion of their business. More women on board does not only mean the mode to attract sales and production but also creates some public image. It does increase financial return as well rather than mere media attention. In terms financial returns means that the return on equity (ROE) increases. 2. The following gives you the comparison between Norway and India in terms of their board Composition

Country Women in % Men in% Rank Year of enactment of woman quota on boards Type of quota
Norway 35.5 64.5 1 2003 Legislative
India 9.5 90.5 18 2013 Legislative

According to Catalyst census 3 Norway ranks number 1 in employing more women directors on board. The reason behind their ranking is due to the composition in their Companies Act. For example- Norwegian Public Limited Liability Act, the requirement regarding the representation of both sexes on the board shall be equal and such requirement shall correspondingly apply for election of deputy members of the Board of Directors. In India, although the enactment of woman quota on boards is of nascent stage, the requirement to have woman director on the board has been made mandatory. At the inception stage the percentage of woman on boards seems quiet decent as compared to countries like Portugal or Japan. 4 where the involvement in the concept of board diversity is poor.

 

Legal compliance

Section 149 of the Companies Act 2013 deals with woman director. As prescribed in Rule 3 of Companies (Appointment & Qualification of Directors) Rules, 2014 and also Regulation 17 of SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, the companies shall have at least one-woman director.

  • In every listed company and every other public company having a paid up share capital of one hundred crore rupees or more or turnover of three hundred crore rupees or more.
  • In case if there is any vacancy in the post of women director, such vacancy has to be filled as early as possible and it should not be later than the next immediate board meeting or after three months from the date of the post being vacant, i.e. whichever is later.

 

Conclusion

Psychologically, it can be stated that when women are employed in a company there seems to be lot of positive energy in the form of having more focus as well as diversity in the work to explore more in the work place. 5

 

Notes:

  1. http://www.legalservicesindia.com/article/article/the-need-for-women-directors-in-indian-companies-1774-1.html
  2. Ibid
  3. Catalyst Census: Women Board Directors (2014), Corporate Women Directors International (2013 & 2014), European Commission Gender Equality Newsroom (2013)
  4. Ibid
  5. Ibid

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