No quota for women in the boardroom

NEW DELHI: Women will now necessarily have to make it on merit into India Inc’s board rooms. A government proposal seeking reservation for the fairer sex on boards of companies has not found favour with the market regulator.

The primary markets advisory committee of SEBI, which discussed the proposal at its last meeting, is opposed to a mandatory quota for women on company boards becoming part of the listing agreement. Following this, the regulator may now look at giving some sort of guidance to listed companies to include women on their boards, a source close to the development told ET. This would be just recommendatory and not mandatory in nature.

The unanimous view of the panel on the issue was that appointments to boards of companies should be on the basis of competence and merit. It was pointed out that there are enough professionally qualified women who were holding important offices and there was no need to make it legally binding.

The market regulator SEBI has already mandated that at least 50% of a listed company’s board of directors must consist of independent directors in case the chairman was an executive chairman. The provision is mandatory for all companies with a paid-up capital of Rs 3 crore or more.

This is not the first instance of such a proposal being resisted. In a 2003, Companies (Amendment) Bill, 2003 had sought to mandate appointment of women directors on company boards but had faced similar opposition from industry bodies. The bill which had proposed various other changes, however was withdrawn by the government from Parliament. It is understood that a revised amendment bill would be presented in the forthcoming winter session of Parliament.

Interestingly, Norway has already implemented a similar rule reserving 40% of the position on company boards for women. All Norwegian public and large private companies who do not comply with the diktat by January 1, 2008, face the risk of closure or fines.