With just a day left for companies to comply with the Sebi’s directive to mandatorily appoint at least one woman director on their boards, a total of 313 NSE-listed companies are yet to fulfil the requirement. The month of March, however, saw 119 companies rushing to comply with the norm by getting a woman on their boards.
Interestingly, in the rush to comply with the Securities and Exchange Board of India (Sebi) directive, issued in February 2014, one in every six companies appointed relatives of the promoters as directors. According to the Prime Database, a total of 103 companies appointed relatives to comply with the norm.
On February 13, 2014, when Sebi came out with the amended listing agreement that mandated listed companies to appoint at least one woman director on the board, 987 companies of the 1,478 listed on the National Stock Exchange did not meet the requirement. However, between February 2014 and March 30, 2015, 674 of the 987 companies appointed a woman director.
Experts said the last-minute hurry and appointment of relatives reflects that the companies are following the regulation only in letter and not in spirit.
“Many companies are still not in compliance, not because of lack of competent women, but because promoters are just not comfortable with having a stranger on the board. On the whole, it is the callousness of companies and the hope that the deadline will get advanced further. Government companies, of course, are helpless because the appointment decision does not rest with them but with the government,” Pranav Haldea, managing director, Prime Database, said.
He added that since the law does not require independent women directors, companies can typically appoint promoters’ family members on the board, which defeats the objective of diversity. Promoters of Reliance Industries, Videocon Industries, JK Tyre and Industries, Bajaj Corp and TVS Motor Corp have all appointed their relatives on the board.
“There is no harm in appointing a family member on the board if the person is capable. But if someone is not competent and is appointed on the board, then it a mockery of the regulations,” J N Gupta, former Sebi ED and founder and MD of Stakeholders Empowerment Services, said.
Of the 69 public sector units listed at the NSE, only 32 were in compliance as on March 27. The original deadline of October 1, 2014, was extended by six months up to March 31, 2015. According to the data, it is only when the deadline nears that there is a spurt in appointment of woman directors. As many as 107 companies appointed woman directors on their board in September and 106 in August in a bid to meet the October deadline.
Arun Duggal, former chairman of Shriram Capital and chairman of Ficci’s corporate governance team, said, “It will take time for people to see the value of diversity and its contribution. Some companies are not convinced that this will add value and therefore it is not on their priority list,” Duggal said.