Thursday, July 16, 2015

Gender Diversity on Corporate Boards in India

The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Gender Diversity on Boards”, which has been authored by N. Balasubramanian and Nirmal Mohanty. The executive summary is as follows:

• Having women on corporate boards is a diversity measure justified on the basis of both social equity and business consideration;

• Global experience indicates that progress in the implementation of gender diversity is typically tardy unless mandated by law;

• European countries in general and Scandinavian countries in particular have progressed significantly in this field, with Norway heading the world with 35.5% representation of women on their boards;

• Effective 1 April, 2015, listed companies in India (with some limited exceptions) were required to have at least one woman director on their boards; close to 88% of the companies reportedly have complied.

• A large number of listed companies in India seem to have appointed women directors in response to the recent SEBI mandate; not surprisingly, most Indian listed companies have only one woman director, although studies have shown that companies with three or more women directors have outperformed those that have had less.

• Aside from absence of critical mass of women directors, a number of other issues have emerged; namely, independence of women directors appointed, paucity of potential independent woman directors and women directors’ own perception.

• Capacity building, supportive boards and legislative action are essential for successful progress in this field.

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