Escolar Documentos
Profissional Documentos
Cultura Documentos
Sandeep Banthia
(13P042)
Suhail Sabharwal
(13P049)
Sunanda Mohanty
(13P051)
Introduction
Companies Bill, 2012 provides for at least 1 woman director in the
prescribed class or classes of companies. But, was this step necessary in
the Indian context? What is the bearing of the law on the respective
companies, Indian corporate scenario and the working women? We try to
answer these questions by analysing the law in the Indian and global
context, and provide the justifications, criticism and recommendations for
the same.
The concept of having a permanent women director comes from the
growing sense of providing inclusivity to women. History tells us that
around the world, and especially in India, women have struggled to stay
on par on all walks of life with their male counterparts, even though they
make up fifty percentage of the population.
The corporate boardrooms are a simple reflection of this fact. The
numbers clearly indicate the wedge in gender diversity. This has
culminated in the provision for one director to be a woman in a certain
class or classes of companies.
Here we are faced with two major questions.
1. Do we need to have a mandatory woman member if the numbers
are stacked against it?
2. Are the reservations or quota system the best solution of this
problem?
1Vinnicombe et al., The Female FTSE Report 2004, Center for Developing Women Business Leaders,
Cranfield School of Management (2004)
2Catalyst, The Bottom Line: Corporate Performance And Womens RepresentationOn Boards (2007)
3 Gender Diversity in the Boardroom and Financial Performance Kevin Campbell & Antonio M
nguez-Vera, Journal of Business Ethics (2008) 83:435451
The above mentioned learning bode well with the idea of board diversity. It
is said that the task of the board of directors is to advance the financial
interests of the owners. The objectives of a board shall come under one of
the following
Wealth creation
Advice for the management
Control operations
Asset and wealth protection
There have been multiple other studies which agree to the same theory.
Some of them are
2000)
Women take their non-executive director roles more seriously, and
Global scenario
The topic of diversity at the workplace long standing and one which has
invoked a wide variety of responses from all around the world. Whether it
is in the form of voluntary efforts or in the form of rules or laws, one thing
is for sure, gender diversity is an extremely important topic in the global
scenario at the moment. The initiatives taken by different countries vary
from recommendations to laws with strict compliance measures and all
these steps have resulted in varying results. In 2010, a United Nations
publication Womens Empowerment Principles: Equality means business
stated that participation of women in decision-making and governance at
all levels was a means to empower women worldwide. Over 100 CEOs
came out in support of this, signing the CEO Statement of Support for the
Principles. Given below are some of the steps taken by different nations
around the world5.
Countries like Australia, China, Canada, New Zealand, Singapore,
Hong Kong, United States of America and the United Kingdom did not have
any mandatory quotas for gender diversity but in countries like Australia,
New Zealand and Canada, steps were being taken towards improving the
level of diversity. Also, Lord Davies recommended that UK listed
companies in the FTSE 100 should be aiming for at least 25% gender
diversity by 2015. Following this the UK Financial Reporting Council issued
a consultation on amendments to the UK Governance code to require
listed companies to provide detail about their board diversity policies.
In countries such as China, Singapore and Hong Kong gender was
not mentioned as a desirable quality when it comes to criteria board
candidates or senior managers. In 2009, The United States of America
approved a policy where disclosure about how diversity was being
considered in identifying nominees for the post of director.
5 Women in the boardroom ,A global perspective, Deloitte,http://www.deloitte.com/assets/Dcom-Tanzania/Local
%20Assets/Documents/Deloitte%20Article_Women%20in%20the%20boardroom.pdf
The European Union and countries like India and Malaysia are taking
steps towards improving the gender diversity in the work places with
certain quotas being in effect under some conditions. For example, in India
the Ministry of Corporate Affairs submitted a proposal in 2009 to make it
mandatory for companies having five or more independent directors on a
board to have at least one female independent director. On June 27 2011,
Prime Minister of Malaysia Datuk Seri NajibTunRazak and his cabinet
approved legislation where companies must achieve at least 30%
representation of women in decision-making positions in the private sector
to generate gender equality. Viviane Reding, the European Commissioner,
has proposed legal legislation requiring 30% gender diversity in the
European Union by 2015, with that figure rising to 40% by 2020.
25
20
15
10
Women serving %
Women on the board %
Indian Scenario
Nifty
Total directors - 718
Women directors - 32 (4.5%)
Executive women directors 4
This above study clearly shows the very low percentage of women in India
boardrooms. As mentioned earlier, diversity in boardrooms is beneficial for
the well-being of any company.
6 Gender Equality Inclusivity and Corporate Governance in India, Journal of Human Values 2013 19: 15, N.
Balasubramanian
The Companies Bill 2012 provides for a woman director in the prescribed
class or classes of companies. But as The Economist magazine had
pointed out much earlier7
Quotas are too blunt a tool. The women companies are compelled
to put on boards are unlikely to be as useful as those they place
there voluntarily. Quotas force firms either to pad their boards
with token non-executive directors, or to allocate real power on
the basis of sex rather than merit. Neither is good for corporate
governance. Norway started enforcing quotas for women in
2006. A study by the University of Michigan found that this led to
large numbers of inexperienced women being appointed to
boards, and that this has seriously damaged those firms
performance.
A quota or a reservation system ends promoting an unsuitable candidate
in the name of compliance. Giving the right opportunity to interested
women, but the chances of just making up the numbers are very high. The
focus should be on bringing about diversity through equality of
opportunity. Women should have a sense of being included in the process
and earned the membership by virtue of their competence, skill and
success. A quota or reservation system as brought about by the
Companies
Bill
2012
does
not
achieve
this,
it
imposes
women
10
so called glass ceiling has stayed intact, preventing natural growth from
the management to the board rooms for aspiring executives.
A more wholesome approach is the one provided by the UK Corporate
Governance Code9.
A separate section of the annual report should describethe
boards policy on diversity, including gender, any measurable
objectives that it has set for implementing the policy, and
progress on achieving the objectives
In the United States, it is required for the factors of diversity in considering
candidates for board of directors, and the company's effectiveness in
achieving diversity.
Although such approaches provide loopholes which could be easily sidelined, a careful implementation of the same, along with the provisions to
ensure that each corporate follows the principle of equity, equality, parity,
diversity and would help in achieving the ulterior goal of having more
women in the boardrooms who would have a feeling of rightfully earning
their place rather than just making up the numbers.
11
References
1. The Gender Implications of Corporate Governance Change,JanisSarra,Citation:
1 Seattle J. Soc. Just. 457 2002-2003
2. Challenges Faced By Indian Women Legal Professionals, Makhija and Raha,
Gender Diversiin the Indian Legal Sector, Rainmaker, 2012
3. Women in Boardrooms: Formulating A Legal Regime For Corporate India,
AkshayaKamalnaath and YaminiPeddada, Journal on Governance, Vol. 1 No. 6,
2012
4. Female board appointments and firm valuation: shortand long-term effects,
Kevin Campbell & Antonio Minguez Vera, J ManagGov (2010) 14:3759DOI
10.1007/s10997-009-9092-y
5. Female Presence on Corporate Boards: A Multi-Country Study of Environmental
Context, SiriTerjesen& Val Singh, Journal of Business Ethics (2008) 83:5563 DOI
10.1007/s10551-007-9656-1
6. Gender Diversity in the Boardroom and Firm Financial Performance, Kevin
Campbell & Antonio Mnguez-Vera, Journal of Business Ethics (2008) 83:435
451, DOI 10.1007/s10551-007-9630-y
7. Gender Equality Inclusivity and Corporate Governance in India, Journal of
Human
Values
2013
19:
15,
N.
Balasubramanian,
DOI:
10.1177/0971685812470327
8. The Perception of 'Glass Ceiling' in Indian Organizations: An Exploratory Study,
Jain, Neera; Mukherji, Shoma, Publication info: South Asian Journal of
Management 17.1 (Jan-Mar 2010): 23-42
9. Women managers in India challenges and opportunities, Author: Gupta, Ashok;
Koshal, Manjulika; Koshal, Rajindar K, Publication info: Equal Opportunities
International 17.8 (1998): 14-26
10. Vinnicombe et al., The Female FTSE Report 2004, Centre for Developing
Women Business Leaders, Cranfield School of Management (2004)
11. Catalyst, The Bottom Line:
RepresentationOn Boards (2007)
Corporate
Performance
And
Womens
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