Over a tenth of India’s biggest listed firms missed the March 31 deadline, set by the Securities and Exchange Board of India (Sebi), to appoint women as independent directors on their boards.
The market watchdog had pushed for the move to improve diversity in India Inc, and provide for better representation to women.
A total of 125 listed firms have missed the deadline, shows the data from nseinfobase.com. This applied to the top 1,000 listed companies, of which at least 37 were government-owned.
Sumit Agrawal, founder of law firm Regstreet Law Advisors, and a former Sebi official, said there hasn’t been any extension granted for the purpose, in line with the extensions granted for other regulatory matters, like changes to norms governing portfolio management services and alternative investment funds, which also fall under Sebi’s domain.
Companies had more than a year to make such appointments and are still free to make appointments through virtual meetings that don’t require physical presence, he said. Besides, the lockdown only began in the final week of March, he pointed out.
“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 penalty notices are bound to follow,” he said.
The regulator’s analysis of the proposal had observed wide support for the move.
“The recommendation will be positive in terms of improving gender diversity. The overwhelming support for the recommendation (based on public comments) has also been noted. Accordingly, the recommendation may be accepted,” said the note, on the regulator’s website.
It, however, noted that implementation could be done in phases. The top 1,000 firms were supposed to be compliant by April 1, 2020.
Government firms are often bound by orders from ministries before they may take such decisions, according to a person familiar with the matter.
This is despite the rising trend towards greater representation globally, said Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS).
Stakeholders have tried to get firms to diversify their boards. This has had some effect on companies, as pressure has increased. “A lot of the investors are pushing for it,” Tandon 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 also took note of comments that suggested more should be done.
“In the long term…(3-5 years)…there should be at least two women directors, of which at least 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 lags in such representation, adding that 30 per cent gender diversity should be targeted.