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Institutional EYE

Commentary on Corporate Governance Issues

Corporate India: Women on Boards

Mr Ajay Tyagi, Chairman Securities and Exchange Board of India, today released a study ‘Corporate India: Women on Boards,’ at a function at the NSE Towers at Bandra Kurla, in Mumbai. The report recommends that companies target to have 20% of their boards comprising women by 2020. In the interim, companies must attempt to have at least one woman as an independent director on their boards over the next 18 months. Speaking at the function, Mr. Tyagi said that this is an easy target for corporate Indian to achieve. Informal discussions with several market participants, professionals, board members, and corporate managers also show that there is broad-based support for this goal.

The study has been jointly prepared by Institutional Investor Advisory Services (IiAS), Women on Corporate Boards Mentorship Program (WCB) and Prime Database. It has been undertaken to understand the trends on female representation on boards and the efficacy of the new regulations.

This study examines the board composition of the NIFTY 500 companies, which represents more than 95% of the of the free float market capitalization of the stocks listed on the National Stock Exchange (NSE) as on 31 March 2017.

Gender diversity on boards remains high on the regulators agenda. Proponents of greater diversity contend that female representation brings in a different perspective, intuitiveness and a more collaborative style of leadership into corporate boardrooms. Their views are supported by a growing body of academic evidence linking gender diversity and financial performance.

Consequently, multiple jurisdictions across the world have adopted legislation to promote diversity at the leadership level. India is one of the first developing countries to have enforced a quota – the legal framework now mandates listed companies to have at least one women director on the board. While this is less stringent than some of the thresholds prevalent in global markets, it is a welcome step in changing the extant market dynamic.

A few of the key findings are:

  • The effects of the regulatory push are clearly visible in the board mix trends – from 5% female representation in 2012, the board composition is significantly more inclusive now with women constituting around 13% (622) of the total directors (4690) in the NIFTY 500. Without accounting for multiple directorships, there were a total of 477 unique women directors in these companies as on 31 March 2017.

  • The Telecom, Information Technology, Health Care, Utilities and Industrials sectors have a higher than average proportion of women directors with the energy sector at the lowest end at 8.9%. Barring the Energy sector, there is no large variance in the proportion of women directors across sectors, possibly indicating that there are no specific and large scale industry related factors influencing the number of women on boards.

  • The average tenure on boards for women directors has been 4.6 years, compared to a much higher tenure of 9.0 years for male directors – this can be attributed to a large number of women directors being appointed only after Companies Act, 2013 came into effect.

  • 15 companies in the study did not have a woman director on the board on 31 March 2017. Bulk of these companies (11) were from the public sector, where the appointment process is delayed/stalled due to pending approvals from the relevant ministry. On a comparative scale, even without any regulatory compulsion, only six companies in the S&P 500 (USA) did not have female representation on their boards.

  • There were some initial concerns that a sizeable portion of new women directors belong to the promoter family and are being appointed in a non-executive capacity just to comply with the norms. But the latest data set invalidates this assumption. There are only 98 promoter women directors (16%) in the NIFTY 500. Of this set, 50% are executive and are driving the company in a leadership capacity. This implies that bulk of the women getting appointed have professional experience and expertise – which suggests companies are not paying mere lip-service to the regulations by promoting family members, but have internalized the legislative intent of the mandated thresholds.

  • 3% of boards are headed by women (as Chairperson) and women directors now account for 7% of executive directorships in the NIFTY 500. This is comparable to European markets, where 4% of chairpersonships and 7% of executive directorships are held by women.

Where India falls behind is independent representation – only 16% of independent directors in India are women as compared to 34% in the STOXX Europe 600 Index. To address this the report urges Indian boards should strive to increase gender diversity.

You can access the full report here.

Institutional Investor Advisory Services India Limited (IiAS)

IiAS is India’s leading voting advisory firm, dedicated to providing participants in the Indian market with voting recommendations on shareholder resolutions, with a fundamental principle of equitable treatment of all shareholders. It also provides independent opinion and data on corporate governance issues.IiAS was incorporated on 24 June 2010. IiAS is registered with the Securities and Exchange Board of India (SEBI) as a research entity.

Click on the links to know more about our partners for this study:


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