Women as Directors in the Indian Corporate Structure

The Companies Act, 2013 (hereafter referred to as 2013 Act) is a landmark legislation in the history of corporate India. The 2013 Act focused on strengthening board governance, reduce the number of government approvals etc. The legislation aims to bring the Act in consonance with the growing trend in business. The Act made the appointment of women directors mandatory in the Board of Directors (hereafter referred to as BOD) of the companies. This is a welcome move towards bringing gender equity in the corporate sector.

Table of Contents

• Introduction
• Significance of Women Director on Board
• Corporate Governance and Women Directors
• Women as Directors under the Companies Act, 2013
• Time frame for appointment of Women Director
• Intermittent Vacancy
• Private Companies to appoint Women Directors
• Roles and Responsibilities
• Women Director as an Independent Director
• Appointment of Women Director on Rise
• Consequence of failure to appoint a Women Director
• Global Representation of Women on Board
• Conclusion

Significance of Women Director on Board

• According to experts companies with woman directors deal efficiently with risks.
• Communication skills of woman are considered better than man.
• Research study proves that the presence of women on Board has a positive influence on shareholder value at the global level.
• Women focus more on long term prospects.
• Women are considered to be more careful in supervision.
• The presence of women on the Board helps to change the dynamics of the Board.

Corporate Governance and Women Directors

A study conducted by the Conference Board of Canada in May 2002 shows link between women and corporate governance.

The study reveals that a gender balance board tends to-

• Pay more attention to audit and risk oversight.
• Considers the need of more categories of stakeholders.
• Examine a wider range of management and organizational performance.
• 72% of board with 2 or more women conducts formal board performance evaluations while only 49% of all male board do.
• Organization that provide board of directors with formal orientation programme have a greater percentage of women directors than organizations with no such programme.

Women as Director under the Companies Act 2013

According to Section 149 of the 2013 Act and Rule 3 of Companies (Appointment and Qualification) Rules, 2014, the following class of companies are required to appoint atleast one women director: –

(i) every listed company;

(ii) every other public company having paid–up share capital of one hundred crore rupees or more;

(iii) every other public company having a turnover of three hundred crore rupees or more.

Time Frame for Appointment of Women Director

A company incorporated under the Act and covered under the provisions of the second proviso of section 149 have to appoint one woman director within six months from the date of its incorporation.

Section 149 (2) clarifies that every company existing on or before the date of commencement of this Act shall within one year from such commencement of this Act.

Intermittent Vacancy

In case any intermittent vacancy of a woman director arises, then it shall be filled-up by the Board at the earliest but not later than

• Immediate next Board meeting or
•  three monthsfrom