The Securities and Exchange Board of India (Sebi) is in favour of having at least one woman as independent director (ID) on the board of listed companies, said two people in the know, including a senior Sebi official.
According to the Companies Act, 2013, all listed companies need to have at least one woman as a director on their board. While most companies have fulfilled this, some have done so by inducting family members of the promoters. And, women on India Inc boards are still low in number.
“The thinking within Sebi is that there should be at least a fifth of women on the boards of listed companies in the next three years. To achieve this, the regulator plans to make a recommendation to the ministry of corporate affairs of making one independent woman director mandatory,” said a person with knowledge of the development, asking not to be named. The person said the recommendation could be made after a newly set-up committee on corporate governance gave its report. The committee has had two meetings so far and, among other things, is looking at the issue of women as directors, the person added.
The 21-member panel headed by Uday Kotak, managing director of Kotak Mahindra Bank, is expected to give its report by October. Currently, 1,516 women hold a total of 2,036 board positions of the latter total of 14,186, shows data provided by Indian Boards Database. It tracks the boards of 1,633 companies listed on the National Stock Exchange. There are 1,223 positions held by women of 7,932 total IDs. Women are slightly less than 15 per cent of all board positions on India Inc.
“The idea is to bring diversity on the board. It doesn’t matter if they are independent or nominee directors, as long as they are not just a symbolic appointment. Ideally, the women director count should reflect their representation in our overall population,” says Shriram Subramanian, founder and managing director at InGovern Research, a corporate governance entity.
At an event earlier this week, Ajay Tyagi, who recently became chairman of Sebi, stressed the importance of IDs. He said as most companies in India were promoter-driven, the selection procedure for IDs needed a re-look.
“In listed companies, the whole discipline is through audit committees and IDs, broadly. There is a need for improvement,” he said.