Good corporate governance results in a board of directors that is well
organized and capable of making independent decisions for the company's benefit.
Diversity in boards has been widely regarded as an important contributor to
improved decision-making. Women directors or female directors with diverse
backgrounds and experiences prefer to look at challenges and solutions from a
broader viewpoint, and therefore diversity in boards has been widely regarded as
an important contributor to improved decision-making.
Female directors have a positive and important effect on the financial
performance of publicly traded firms. As a result, it is suggested that Indian
companies consider the presence of women on boards of directors and in senior
management in order to boost financial viability and efficiency and achieve
Gender equality is established in the Indian Constitution's preamble,
fundamental rights, fundamental duties, and guiding principles of state policy,
but Indian culture is still dominated by men. The workplace is a location where
gender differences are plain to see. Men continue to hold the top posts in
businesses, while working women are shunned.
Women's social standing, on the other hand, is changing in the present era of
globalization. The Indian government has passed a number of legislations aimed
at enhancing the status of women in the country. As an example, the appointment
of at least one-woman director to different classes of company boards of
directors under the historic statute, The Companies Act 2013, is a
ground-breaking action by the government.
Any publicly traded company shall appoint at least one female director within
one year of the second provision of Section 149(1) of the Act taking effect.
Every other public business with a paid-up share capital of Rs.100 crores or a
revenue of Rs.300 crores must appoint at least one-woman director within one
year of the second provision to Section 149(1) of the Act coming into effect.
Companies incorporated under the Companies Act of 2013 have been given a
six-month grace period to comply with this condition from the date of their
incorporation, which begins on the date of their registration.
The following standards must be met by current businesses within one year, while
new businesses founded under the New Company Act have six months to meet the
requirements. A further requirement is that, in the event of an intermittent
vacancy for a woman director, the board of directors must fill it within three
months of the vacancy date or by the next board meeting, whichever occurs first.
This represents a significant step in the right direction.
Many other nations, including Norway, France, Italy, Spain, and Belgium, have
followed suit by implementing legislation or quotas requiring companies to
nominate women to their boards of directors.
Company and Board of Directors
The board of directors of a corporation is its most essential governing body,
and directors are primarily responsible for the company's stable, effective, and
long-term operations, as well as defending the company's and its stakeholders'
interests and progress.
Most companies recognize the value of hiring directors of varied ages,
educational backgrounds, and functional abilities, but they frequently neglect
the benefits of gender diversity.
The paucity of female directors on corporate boards is an embarrassment. Women
account for only 4% of the board of directors of publicly traded Indian
companies. There are a multitude of explanations for the lack of female
participation in top positions; some believe that traditional firms do not hire
women; others claim that maternity leaves disrupt work; and still others claim
that safety is a worry.
A "brain drain" and a "talent retention dilemma" have emerged as a result of the
absence of female executives. Businesses with more women on their boards of
directors do better financially, according to the new Catalyst Bottom Line
Study. According to statistics, companies with three or more women on their
boards of directors outperformed the average. Experts say that in times of good
outcomes, female management provides the most fuel for improvement, and that
organizations with women directors often deal with risk more efficiently.
The law passed by the Indian government is a good start toward empowering women
in the workplace. Many competent women can bring value to boards of directors;
with this necessary provision, these deserving women will be able to exhibit
their abilities, and businesses will begin to appreciate the importance of women
Many benefits would accrue from appointing an independent woman director;
however, since there are no established norms for appointing an independent
woman director, businesses are more likely to hire women from the promoter's
family and friends, regardless of whether or not they are qualified to serve as
directors. Women will be appointed to the boards of directors in this situation,
but they will be the promoter's wife, daughter, niece, or friend, rather than
Norway's achievement in this area could serve as an example for us; the country
established a 40% quota for women on its boards in 2003. At the start of the
campaign, women occupied less than 7% of board seats, but by 2010, they had
filled more than a fifth of those positions. Despite the fact that Norway's
female population has grown, there is little evidence that corporate performance
The installation of quotas in Norway had a negative impact on both performance
and board uniformity, according to a study done by the University of Michigan.
Norwegian corporations appointed a considerable number of inexperienced women to
their boards of directors in order to comply with the rule.
While legislation and quotas to promote women to top positions in enterprises
can be effective, their benefits will be short-lived if there are no clear
guidelines for execution and the government does not sufficiently monitor them.
Women should be respected for their abilities, not their gender. It is evident
that only experienced women with the relevant credentials should be appointed to
boards of directors. There are many great women out there; only the most
deserving and qualified should be hired.
The deadline for at least one female director to be appointed has been moved out
As on April 1st, 2015, businesses will have extra time to discover the top
female candidates. This provision is undoubtedly a step toward women's
empowerment in the workplace, and it will assist women in keeping their jobs.
The issue of equal opportunities for women and their roles in long-term economic
growth has become a hot topic in the political arena around the world,
particularly in India. The United Nations has passed a resolution on global
sustainable growth in the coming decades. Gender equality has been a priority of
global sustainable development for 15 years.
For achieving the desired development at all levels of decision-making Women's
participation in Managerial decisions do not penalize a company's financial
results but should improve it without any legislative or political restrictions
The European Union is an interesting study environment in this sense.
The EU which in 2012 proposed a directive (European Commission proposal, June
2018) to raise the minimum wage. Gender parity on boards, with at least 40% of
non-executive directors of publicly traded firms being women. By the end of
January 2020, at the latest. And the fact that numerous political and
legislative steps have been taken.
The private sector and business community will be critical in bridging the
skills-to-jobs gap and ensuring women's access to decent work. Without the
participation of business, vocational and technical training, life skills, and
financial literacy programs for women to help them improve marketable skills and
improved decision-making abilities cannot be implemented effectively.
Microfinance may also be used to invest in women entrepreneurs and put their
products and services into supply chains. Improving women's internet and ICT
access will result in a growing market of connected women who can be connected
to business opportunities. Furthermore, as employers, the private sector should
invest in women's safety at home and in public spaces, as well as ensure their
mobility by accessible transportation.
A legal requirement that businesses hire women has been questioned as an
excessive regulation. To address this, it is important to understand how
patriarchy affects both public and private life.
The law is known for staying away from controlling people's private lives, which
is unfortunately the most common place where women are abused due to
patriarchy's ills. The public domain, on the other hand, consists mostly of men
who regulate other gendered subjects by enacting laws that are devoid of
In the given context, this can lead to logical inference. This indicates that
women's autonomy is robbed by the patriarchal inequality they face in the
private sphere. By separating them from traditional gender roles, they are
forced to enter the business world and hold senior positions.
As a result, laws are obligated to correct social inequities and create
opportunities through public regulation. The legal provision can only be seen as
a gentle prod to instill the concept of gender diversity. It is up to society to
make provisions such that, first and foremost, women receive an education and,
as a result, advance in their careers. If this is accomplished, there will be no
need for token appointments or a "business case" to achieve gender equality.
Section 149(1) can be a first step toward gender equality in the Indian
corporate environment. However, given changing conditions and continued
non-compliance by businesses, it is imperative to reconsider its effectiveness.
There is a pressing need to increase the number of women named to positions of
power. Other amendments, such as requiring women to be appointed to independent
directorships and extending the Act's reach to more types of businesses, may
also be beneficial.
Easy and non-specific legislative reforms would not be enough to allow women to
perform at their best. Women must achieve equal control in both public and
private life in order to be able to make decisions and make choices for
themselves. Corporations and the law itself should not erect any socio-cultural
barriers, especially stereotypical presumptions about their capabilities and
Simply stated, no justification based on a "economic case" or "increased
benefits" should be needed to ensure that women are represented equally in
Despite the fact that there are thousands of capable women on boards, the vast
majority of listed companies in India now have only one woman on their boards to
meet the legal requirement. They are expected to see the merits of women
directors on boards in the future and support the provision of women directors
on boards in spirit rather than letter.
Regulatory agencies, government companies, policymakers, and shareholders with a
female board of directors need special attention. From a strictly economic
standpoint, corporations should increase the number of women on their boards of
Women being excluded from boards solely on the basis of their gender is both
unfair and unethical. People react positively to gender diversity in terms of
ethical and social behaviors. The government keeps track of the implementation
and efficacy of diversity policies and activities, and designs interventions
based on solid research findings. Women on corporate boards research is a
valuable tool, not just for scholarly contribution or just fairness, but also
for laying the groundwork for reform and successful gender equality at the
highest levels of corporate decision-making. The argument for fair gender
representation is strengthened by the strong link between increased gender
diversity and corporate financial success.
Just a few females were admitted into the family business in India twenty
decades ago. The truth remains that there is still a gender imbalance on India
Inc's boards of directors. To meet this requirement, several businesses have
used the tick-the-box method. Companies also found a way to fulfill this
criterion by appointing their wives and other family members. In India, women
have long been subjected to discrimination. Though India is taking all of the
necessary steps in the Company Act, understanding how India Inc operates, there
is still a long way to go.
- Companies Act, 2013 (mca.gov.in)
- Report: The Bottom Line: Corporate Performance and Women's
Representation on Boards | Catalyst
- Appointment of Woman Director (legalservicesindia.com)