More and more companies are appointing professionals as women directors on board, instead of inducting family members, including wives and daughters, as directors to meet a regulatory deadline that require listed firms to appoint at least one woman director on their boards.
The Securities and Exchange Board of India (Sebi) had asked companies to appoint at least one woman director before April 1, 2015, 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).
According to the data from Prime Database, there are 1,418 women directors holding 1,755 board positions till date in companies listed on the National Stock Exchange (NSE). Of the NIFTY 50 companies, 45 women directors were appointed since January 2013, out of which only four were from the promoter family.
“Appointing women directors from the promoter family just to comply with the mandate is against the spirit of the company law. The rationale behind the law is to not only bring gender diversity to the boardroom, but the women director should also be able to offer professional guidance as well,” said Veerappa Moily, Congress leader and former corporate affairs minister.“It is a healthy trend that companies are now searching for talent outside the promoter family. With increasing accountability towards stakeholders, companies are now getting proactive in inducting professional women directors on board.”
Women working as corporate executives, bankers, lawyers and chartered accountants are in high in demand to take up directorships in listed companies.
“Companies are looking for specific skill sets while recruiting women directors, depending on the committees she will sit on. The most popular skill sets, which companies look for are governance, human resources, finance and general management.” said Pallavi Kathuria, leadership and board advisory consultant at Egon Zehnder, an executive search firm.
With institutional shareholders becoming more active, the demand for professional women directors are likely to increase in the coming years. But finding suitable women candidates to take up these positions could be a tough job.
“There is shortage of professional women directors qualified for the job. The ministry of corporate affairs should take positive measures, including preparing a list of qualified women professionals who could be appointed on board.” Moily said.
“As engagement of institutional shareholders with the board increases, it brings greater board diversity overall (multitude of expertise, market and cultural experience) – which is a bigger landscape to address than just gender diversity,” Hetal Dalal, chief operating officer, Institutional investor advisory services (IiAS), proxy advisory firm.
(Additional inputs by Himani Chandna)