WUNRN
http://www.trust.org/item/20150401132439-6uvvf/?source=dpagerel
India – Firms Mock Gender Diversity as Boardroom Deadline Passes – Nepotism Abounds
Employees sit during their lunch break inside a textile mill of Orient Craft, Ltd, at Gurgaon in Haryana, northern India. Photo: Reuters – Anindito Mukherjee
By Nita Bhalla – April 1, 2015
NEW DELHI (Thomson Reuters Foundation) -
Corporate India has made a mockery of an order to appoint women directors by
recruiting wives, daughters and even stepmothers, analysts said on Wednesday as
the deadline set by regulators for boosting gender diversity in the boardroom
passed.
The Securities and Exchange Board of India
(SEBI) last year imposed a quota of at least one female director on the board
of every listed firm, and last month SEBI head U.K. Sinha warned of "very
serious" consequences if companies did not comply.
Despite a last-minute rush of appointments to
meet the April 1 deadline, more than 100 firms have not complied, and many of
those which have, have responded by installing company bosses' female
relatives with no professional experience, analysts said.
"It's a mockery of the law. The compliance
has substantially been done in letter and not in spirit," Pranav Haldea,
Managing Director of PRIME Database, a market research group, told the Thomson
Reuters Foundation.
"More than half the companies have
appointed their relatives onto the board, who will speak in the same voice as
their promoters and so the diversity being sought by SEBI has been
defeated."
Figures from the PRIME database showed 189 out
of 1,457 relevant firms listed on the National Stock Exchange of India had not
appointed any women directors by 4.30 p.m. on April 1, indicating that 58 firms
had named a woman director in the past 24 hours.
Reliance Industries, India's largest
conglomerate by market value, has installed the wife of Chairman Mukesh Ambani,
while the stepmother of tycoon Vijay Mallya now sits on the board of Mangalore
Chemicals and Fertilizers.
Other companies which have appointed female
relatives of key executives as directors include Raymond Ltd, Asian Paints,
Godhra Phillips, Videocon Industries and JK Cement.
"I think it is a worry. This should not be
about tokenism. The intent was really to get more women professionals into the
boardrooms," said female industrialist Kiran Mazumdar-Shaw, chairman and
managing director of Biocon Limited.
"Having said that, at least we are
breaking that particular male bastion and we are at least including women in
the boardroom, even if they are from the promoter's families," she told
the NDTV news station late on Tuesday.
Mazumdar-Shaw said SEBI should revise the order
to make it clear that only independent women can be recruited onto boards.
Some of the companies guilty of non-compliance
are large state-owned corporates such as energy firms Oil and Natural Gas
Corporation, GAIL and Bharat Petroleum Corporation.
They are likely to face stiff punishment from
SEBI, Haldea said, adding that penalties could include suspension from trading,
freezing of promoters' shareholdings or even a fine of up to 250 million rupees
($4 million).
Firms argue that there is a scarcity of
professionally qualified women to fill positions in the boardroom, but Haldea
said that was simply not the case.
"That is really just a bogey. There are
plenty of highly qualified women out there in sectors such as banking and
finance, but they are not being allowed to join this old boys' club," he
said.
"Only a thousand or so qualified women are
needed. Is it really that hard to find these women in India?"
The scarcity of women in the boardroom is not
unique to India - nearly one-fifth of the world's 200 largest companies have no
women directors, according to an August 2014 report by Biz Divas, a national
network of professional women.
Some western countries such as France, Italy
and Norway have made it compulsory for larger firms to have women on their
board. As a result, in Norway women's representation on company boards surged
to 41 percent in 2013 from 7 percent in 2003.
But the largest economies - the United States, China and Japan - have no quotas for women and have had the lowest increase in female directors, suggesting that companies do not bring women onto the board unless they are forced to.