India Inc. will need to institute 966 women to company boards by October 1, 2014. The report a report titled 'Women on Boards: a Policy, Process and Implementation Roadmap' by law firm Khaitan & Co in association with Biz Divas, a national network of professional women showed that amongst the 1470 public listed companies, the number of women directors on board were 350, representing only 4% of the total number of Independent directors on Board.
The New Companies Act 2013, was enacted with the objective of bringing in more accountability and robust corporate governance. The New Act requires every listed company and every public company - with a minimum paid up share capital of Rs 100 crore or an annual turnover of at least Rs 300 crore, is required to appoint a woman director.
Through the research done for the report, Khaitan & Co and Biz Divas found that in the global scenario as well, women were under represented at the board level. Some key developed countries like France, Italy and Norway have made Women on Board compulsory for the larger companies, resulting in a strong gender mix of boards. However, while these cases strongly suggest the need for a push to accelerate the change, gender equality at board level has, till now, failed to trickle down to executive.
The report identifies some key global case studies of gender diversity in developed nations. Key among these are Norway which is a forerunner in by being the first developed nations to make the inclusion of women in company boards mandatory. Norway has witnessed women representation in boards shoot up from 7% (2003) to 41% (2013). The report goes on to suggest that the Norway implementation was made successful by posing serious penalty for non-compliance as grave as dissolution. Other countries that have not implemented penalties have seen far less results.
The largest economies - US, China and Japan - which have no quotas for women in boardrooms, had the lowest growth of women on boards, suggesting that unless pushed, change does not occur.
India is the first country amongst the developing nations that has chosen to make representations of women on company boards mandatory. The Indian corporate boardroom displays a difference in the percentage of women directors in different sectors. This may be an impact of the maturity of the industry as well as outsourcing of talent. The Iron & Steel industry in India boasts the maximum representation of 10.98% amongst the BSE Sensex companies. In the Fortune 500 companies in India there is only one woman representative on the boards.
The New Companies Act has already initiated changes in the corporate board rooms in India. In four-and-a-half months since the SEBI board meeting in February, 2014, 91 women have been appointed to 97 directorship positions in 94 companies (as of 30th June 2014). India may well be a good success story for the other developing countries, if the country is able to demonstrate an actual change in the women representation on board as well as influence their presence in senior leadership.
Haigreve Khaitan, Managing Partner, Khaitan & Co said, "India is one of the fastest growing economies of the world, and the initiative for higher representation for women in the boardroom and senior management positions in the corporate world is a very significant move."
The report said that if organizations wish to remain competitive, they need to capitalize on the tremendous advantage and potential that women leaders bring to the business. Companies will need to optimally utilize their human resources and ensuring adequate representation of women across their boards will be a significant step in this direction. Along with this, changes also need to be made at the grassroots level so that gender stereotypes are broken down.