Institutional Investors Advisory Services (IiAS), one of the proxy advisory firms in India, along with SBI Mutual Fund has recently conducted a study on Women on Corporate Boards in India. The key findings of the study are as follows:

• The study has investigated the board composition of NIFTY 500 companies in the present study. This study is second in row in an enquiry on the progress of gender diversity in boards in India. As on 30 March 2020, the sample of NIFTY 500 companies had 4,657 directorships, of which 777 are held by women.


• Regulation has helped increase the number of directorship held by women. Section 149 (1) of Companies Act, 2013 and Regulation 17 (1) of SEBI (LODR) Regulations, 2015 provides that every listed company and every other public company having a paid up share capital of Rs. 100 cr. or turnover of 300 cr. shall have at least one women director in its board. SEBI while accepting the recommendations of Kotak Committee, lead by Mr Uday Kotak, has mandated that top 500 companies by Market Capitalization shall appoint at least one woman as an Independent Director from 1 April, 2019. With effect from 1 April, 2020, the regulation would be applicable to top 1000 companies by market capitalization.


• However the regulation has compelled the boards to focus on gender diversity, several boards have started appreciating the need to onboard more women directors. Therefore, almost 44% of Nifty 500 companies have two or more women directors on their boards. Women have a higher representation in sectors such as healthcare; consumer staples sectors and real estate.


• The study has also experienced that 590 women hold 777 board directorships in NIFTY 500 companies. 93% of the NIFTY 500 companies have at least one woman as an Independent Director. Existing women directors have been found to have the competence to hold more directorships, a fact established by the IiAS study.


• As on 30 March 2020, 71% of the directorships held by women are in the Independent category. This is a strong signal against the initial fear of having women directors representing the promoters only. The women directors so appointed are found to be professionals in their own area of expertise.


• In an interacting fact it has been found that out of the 590 women holding 777 board positions, there are just 10 women that hold five or more directorships. Therefore, the existing women board leaders have the potential to occupy position in boards of many more companies. From 1 April 2020, regulation allows directors to hold seven directorships in listed companies. However, the study observed that given the increasing level of responsibilities and accountability getting attributed to directors, it would be better if directors consider limiting the number of board memberships and place their due diligence before accepting board assignments.


• Women representing as Chairman of the board, continues to remain as a challenge in Indian boardroom story – only 18 out of 491 ‘NIFTY 500’ companies have women in Chair of the board. However, women are playing a significant role on important issues of board compensation and remuneration, audit related aspects and internal finance controls as part of Nomination and Remuneration Committees and Audit Committees of their respective boards.


• It has also been found that for most of the women, it’s a first step in the board with their recent appointments in wake of the recent regulatory push. As a result, women are younger in age and have held their directorships for a shorter duration than peers in boards. They are standing young with an average age of 56 years as against 61, for their peer men colleagues in board.


• In an exercise to relate the findings with another study conducted by MSCI, it is observed that three or more women on a company’s board help them perform better financially. The research concludes that a more diverse workforce and boards lead to a greater diversity of ideas and actions. While comparing the outcomes of the two studies it can be observed that 10% of the NIFTY 500 boards have three or more women on the board. The better governed companies have realized the importance of gender diversity and are taking actions to enhance participation of women in boards.


• While the board level gender diversity agenda is being addressed under the realm of the regulatory framework, lack of women in rank and file below the board has continued to show a wide gap. Public Sector Undertakings (PSUs) lag far behind in their endeavour to demonstrate the importance of gender diversity. This requires some structural changes in the selection process undergo while selecting directors for the public sector in India.


• Now, the time is opportune for Indian Companies to take decisive steps on gender diversity in order to cast a strong and positive message to its investors.

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