Hyderabad : It is a wonderful idea to appoint at least one woman on the board of directors of any listed company. It is also shameful that a regulator had to step in to warn the companies with huge penalties, if they fail to adhere to this rule.
But shouldn't all this begin at home for the regulator?
Think of this. The Securities and Exchange Board of India (Sebi), the regulator of stock markets, does not have a single woman director on its board. The Board has one chairman, three whole-time members, two members representing the Government of India – one each from the Ministry of Finance and Ministry of Corporate Affairs – and two part-time members. And, all are men.
The capital markets regulator has several committees in place, some of which are chaired by women and there are many highly knowledgeable female members on those committees. But why are none of them on the apex Board of Directors of Sebi
Sebi may use the excuse that it is not mandatory for it to have a woman to be on its governing council as it is not encompassed by Clause 49 of Equity Listing Agreement that makes it mandatory to have a woman on the board of directors.
However, does any rule bar the regulator from having a woman director?
Doesn't the moral of 'practice before you preach' apply to Sebi?
Chairman of Confederation of India Industry (CII) of Andhra Pradesh Suresh Rayudu Chitturi sums it up excellently. "What is good for the goose has to be good for the gander. It is a very good move to make it mandatory for the companies to have woman directors on the boards. This is how we will start training our women and be more active as entrepreneur."
Suresh Rayudu, who is also the vice-chairman of Srinivasa Hatecheries Ltd, said: " I am really surprised that SEBI doesn't have a woman member on its board. I am disappointed that they wouldn't lead by example.
Anyone is welcome on board
As the April 1, 2015 deadline is approaching fast, the companies are now not bothered about the qualifications and expertise also. Just every one and anyone is welcome as a non-executive director.
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In most cases, it is the family members who are coming on board, said Chitturi.
Now most companies apparently are scrambling to scour for women directors to comply with the regulatory diktat -- first to appoint any female as a director -- and then buy time to look around for quality people and induct them eventually.
No woman director? Pay Rs 25 crore as fine
The maximum penalty for failing to comply with the rule can go up to Rs 25 crore. The SEBI can invoke its powers and initiate action against the companies under Section 11B of the SEBI Act on the charges of flouting its orders and also under Section 15HB.
Though the deadline for empowering the boards with at least one woman director was originally set as October 1, 2014, it was eventually put off to April 1, 2015. As on March 23, over 15o out of the top 500 companies, in terms of market capitalization, haven't complied with this rule.
Over 400 companies still do not have a woman director
Out of the 1,479 companies listed in the National Stock Exchange, 451 did not have a woman director on their boards by March 20. In all, about 580 companies have complied with the rule since February 2014 when the rule was passed.
In fact, SEBI Chairman U K Sinha said on March 20: "I find it very shameful that in this country, about 8,000 listed companies can't find even one woman who is competent enough to be on their board." He also warned the companies with very serious penal action and they could check the track record of the SEBI's actions against the companies, which flouted the norms.
BVR Mohan Reddy, Vice-Chairman of NASSCOM and Chairman of Cyient, said: "I think positively about having women on the board of directors of companies. It sends a very strong message across in terms of diversity and inclusiveness. Women bring several new perspectives to the board, in addition to the common perspectives of businesses. I strongly feel that women on the board do add a lot of value."
Some large corporates have internalized it – of inducting women directors on their boards -- as a policy rather than following it as a rule imposed by the regulator. For instance, Kalpana Morparia is on the Board of Directors of Dr Reddy's.
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