Covid-19 crisis: Over 100 firms missed deadline to appoint women directors

At least 37 of the ones which missed the Securities and Exchange Board of India (Sebi) deadline were government-owned

Over a tenth of India’s biggest listed firms missed a deadline to appoint women as independent directors on their boards. The regulator had pushed for the move to improve diversity in corporate India and provide for better representation of women at the top.

A total of 125 listed firms have failed to appoint an women independent director on their boards by the deadline that expired on March 31st, showed data from corporate tracker nseinfobase.com. This applied to the top 1000 listed companies. At least 37 of the ones which missed the Securities and Exchange Board of India (Sebi) deadline were government-owned.

Sumit Agrawal, Founder of law firm Regstreet Law Advisors and former Sebi official said there hasn't been any extension granted for the appointment of independent women directors in the same way that extensions have been granted for other regulatory matters like changes to norms governing portfolio management services and alternative investment funds which also fall in Sebi's domain.

Companies had more than a year to make such appointments and are now also free to make appointments through virtual meetings which don’t require a physical presence, he said. Besides, Agrawal pointed out, the coronavirus lockdown was imposed at the end of March.

"Sebi is still struggling to get tick-the-box compliance. Questions of quality and conflict-of-interest are still far away. Given that...I believe the penalty notices are bound to follow." he said.

Sebi’s analysis of the proposal had noted that there was wide support for the move.

“The recommendation will be positive in terms of improving gender diversity on the Board. The overwhelming strong support for the recommendation (based on public comments) is also noted. Accordingly, the recommendation may be accepted,” said the note available on the regulator’s website.

It, however, said that implementation can be done in a phase-wise manner. The top 1000 companies were to be compliant by April 1, 2020.

For government firms, they are often bound by Ministry orders before they can take such decisions, according to a person familiar with the matter.

This is even as there has been a trend towards greater representation globally too, said Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS). Stakeholders have tried to get companies to have more diversity on their boards, including gender diversity. This has had some effect on companies as pressures increase.

“A lot of the investors are pushing for it,” he said.

An analysis of the data shows that companies may be chasing the same pool of women to fill up their boards. The number of directorship positions held by the average director is 1.2. For women, it rises to 1.3.

The regulator’s analysis of the recommendations also took note of comments which suggested that more should be done.

“In the long term...(between three to five years)...there should be at least 2 women directors, at least of which one should be independent director; will lead to...(20 per cent)...women directors in the long term,” said one of the comments. It noted that India lagged the globe in such representation, adding that 30 per cent gender diversity should be targeted.

Courttesy : Business Standrad