IWDI

Legislation

The Companies Act, 2013 is milestone legislation in India that revamped the laws governing a corporation from its birth to dissolution. The legislation attempted to try to do away with all the provisions that were outdated and inconsistent with growing business trends. Keeping in mind the limited representation of women in business in India, Section 149(1) of the Act provides for the compulsory appointment of one woman director in certain classes of companies. Section 149(1) is perhaps the first step towards achieving egalitarianism in the Indian corporate scenario.

THE WOMEN DIRECTORS CONUNDRUM

Mandatory “quotas” within the Board of Directors for women has been a much-debated issue since the overhaul of the Companies Act in 2013. Section 149 of the Companies Act, 2013 and SEBI (LODR), 2015 made it mandatory for all listed companies to have at least one woman on their boards making it landmark legislation of the Companies Act, 2013. The fact that the overall percentage of women occupying senior roles in Indian boardrooms is merely 8.5% is a testimony to the fact that many lacunae still exist in this policy. India ranks at 23 out of 56 countries globally in terms of the presence of women in boardrooms.

Are women quota’s efficient?

While this provision clearly seem to be an efficient step towards achieving gender equality, the compliance by companies reveals otherwise. The National Stock Exchange (NSE) reported that out of 1,723 listed companies, 1,667 companies had met the mandate of one woman director on board. But out of this pool, women directors in 425 companies belonged to the promoter group or family. The women directors who are being appointed to the board, are to merely meet the mandate and do not fulfill the purpose of the legislation in its spirit. That dilutes the very purpose of giving more representation to women, and to assist break the glass ceiling that has long held them back from reaching leadership roles. Women empowerment is not something where a woman can merely play a simple role in a corporate but should be a part of the higher level of the decision making process.

Provisions under Companies Act, 2013

As per the second proviso to Section 149(1) read with Rule 3 of The Companies (Appointment and Qualification of Directors) Rules, 2014 (Chapter 11) following class of companies are required to appoint a minimum of one Women Director: ∙ Every listed company; ∙ Every other public company having a paid-up capital of One Hundred Crore Rupees or more; or a Turnover of Three Hundred Crore Rupees or more.

The time is given to the company for compliance with the provision: When the provision of appointment of a woman director applies to the company, the company shall comply with such provisions within six months from the date of its incorporation.

The time is given to the company for compliance with the provision: When the provision of appointment of a woman director applies to the company, the company shall comply with such provisions within six months from the date of its incorporation.

Provisions under SEBI (Listing Obligations and Disclosure Requirements), 2015

In the case of listed companies, as per Regulation 17(1), the board of directors shall have an optimum combination of executive and non- executive directors with at least one woman director and not less than fifty percent of the board of directors shall comprise of non-executive directors.

What are the Roles and Responsibilities of Women directors?

The roles and responsibilities are the same as that of any other director. A woman can act as an independent director who is responsible for improving the corporate credibility and also improving governance standards of the company. Also, women directors can be appointed as a nominee director who mainly looks after and represents the interests of the appointee. An appointee can be a stakeholder, a creditor, or a shareholder.