India's stock market regulator, the Securities and Exchange Board of India, has decided that companies need to be pushed into appointing women members on their boards.
SEBI has asked all listed companies to make sure that they have atleast one woman board member by the end of March, or risk regulatory action. SEBI had earlier fixed a timeline of October 2014 for this measure to be implemented. It later extended the timeline by another six months, but has found that over one-third of India's top 500 companies did not appoint a single woman to their boards.
India passed a new law in 2013 that mandates any public company with five or more directors to have at least one woman baord member. That year, only 4.7 percent of India's corporate directors were women, and little seems to have changed from that time. SEBI's action is to ensure that rule is adhered to.
The regulator has written to all stock exchanges to ensure appointments are made by the March-end timeline. But with just a fortnight left for the month to end, it is unclear if companies can quickly select and appoint new board members. SEBI has also written to more than 160 companies to further press its case.
However the regulator has not spelt out if the board member can be from a promoter's family. Several companies appointed wives and daughters on their boards to show compliance, but that does not help corporate governance. Others have appointed women of proven leadership skills, such as Kiran Mazumdar-Shaw, the chairperson of Biocon, who now sits on the board of software major Infosys.
If SEBI fails to ensure compliance, more stringent measures such as a mandatory quota system can be an option. Currently, India is way behind some other countries, some of which have adopted quotas for higher representation of women. According to a report, both Australia and Norway adopted 40 percent quotas for women in board positions. In France, half of the listed companies have atleast three women on the board. This happened after it implemented a quota system in 2010. Since then, women representation in boards has risen to 29.7 percent in publicly listed companies from just 7.2 percent in 2004.