First wives, you may start boarding now

Public firms with share capital of at least Rs 100 cr, turnover of Rs 300 crore or more or outstanding loans and deposits that add up to Rs 200 cr will have to comply with the new stipulation

With the draft rules being made public and some sections of the new Companies Act having been notified, the contours of the new law are emerging more clearly. Though it will be a few months before all sections are notified and the rule-making process is complete after receiving and processing suggestions and making any changes required, smart companies must have already begun the trek on the long road to compliance.

One of the key provisions was the requirement of at least one women director. The law itself did not provide for the criterion for the companies which will be required to comply with this provision. The draft rules published on September 9 have given the fine print.

Accordingly, public companies with share capital of at least Rs 100 crore, turnover of Rs 300 crore or more or outstanding loans and deposits that add up to Rs 200 crore will have to comply with the new stipulation.

It is a welcome step to bring in more women into the boardrooms, whose percentage representation is only in single digits. But, it is not very clear what is the logic of applying such financial parameters for a gender-based reservation. Was this to ensure that companies with higher responsibilities get the benefits of qualities generally associated with women by a patriarchal society?

Only a small percentage of 850,000 registered companies would comply with these parameters. Can we compare this with saying women in households below poverty line need not get to vote? May be that would be stretching the point too much.

But, then as if to nullify such a criticism, the draft rules say that all listed companies would require a woman director. Again, a significant portion of the 4,000 listed companies would not even come close to the financial parameters prescribed for a public company but would have to comply with the woman director norm because they are listed.

Where would corporate India suddenly find (one year has been given) 4,000 qualified women? Will they go for young, professionally qualified, bright girls? If they do so, that will be a great quantum leap for corporate India.

But the danger is the promoters may look inwards. They might look at their middle-aged wives, looking for something worthwhile to do as their kids are now grown up and have lives of their own. They may look at their twinkle-eyed, party-hopping daughters, barely past teenage to fill that mandatory board seat.

Since the mandatory woman director need not be an independent director, something similar to what happened in the political arena when similar reservations were introduced in local self-government may get repeated. Husbands and fathers may sacrifice their own board seats to get in their wives and daughters. The odd-daughter in law/mother -in-law also may get a chance to some high tea and cashews.

Despite all these multiple escape routes, I hope and believe the law will succeed gradually, if not immediately, in bringing a few hundred competent and independent women into the boring, geriatric, male-dominated Indian board rooms.