Saturday, Oct 25, 2014

When law says bring women on board, firms look to home

RIL chairman Mukesh Ambani's wife Nita Ambani was appointed to Reliance Industries board on June 18, 2014. RIL chairman Mukesh Ambani's wife Nita Ambani was appointed to Reliance Industries board on June 18, 2014.
Written by Sandeep Singh | New Delhi | Posted: July 7, 2014 2:03 am | Updated: July 7, 2014 8:17 am

By September 30, listed companies in the country must have at least one woman on their board — made mandatory by SEBI in line with the Companies Bill 2012.

Data sourced from Prime Database and accessed by The Indian Express shows that while 140 private sector companies have appointed a woman director on their board over the last one year, at least 29 have picked one who is either part of the promoter group or belongs to the promoter’s family.

The Companies Bill, which came into effect in August 2013, proposed women directors to bring gender equality in the board room, and SEBI issued a circular in February 2014 setting a September 30 deadline. A committee on corporate governance constituted by the Ministry of Corporate Affairs had said, “(Diversified board) contributes to better performance, since in such cases decisions would be based on evaluating more alternatives compared to homogenous boards… Diversity can widen perspectives while making decisions, avoid similarity of attitude and help companies better understand and connect with their stakeholders.”

Appointing women associated with the promoter groups could defeat the purpose of the exercise. Says Deepak Parekh, HDFC Chairman and a leading voice in the corporate world, “If the woman is competent, then it is not wrong to appoint her. However the nomination committee headed by the independent director should also judge the eligibility, capability, experience of the individual to see whether they fit or not. That process should be there.”

Prithvi Haldea, Prime Database Chairman, says the appointment of family members was “expected”, “and therefore the guidelines should have made it mandatory for companies to appoint only an independent person as woman director”.

Here is the list of women related to their promoter groups appointed by 29 companies to their boards in the past year. The Indian Express asked each company about the search process conducted before the appointment:

Nita Ambani, appointed to Reliance Industries Ltd board on June 18, 2014.
Wife of RIL chairman Mukesh Ambani.
No response to the email sent.

Roshni Nadar, appointed to HCL Technologies board on July 29, 2013.
Daughter of HCL founder and chairman Shiv Nadar.
No response to the email sent.

Amrita Amar Vakil, appointed to the board of Asian Paints on May 14, 2014.
Wife of Amar Vakil, the son of Asian Paints co-founder.
No response to the email sent.

Shobhana Ramachandhran, appointed to Sundaram Finance board on January 27, 2014.
Great granddaughter of T V Sundaram Iyengar, founder of TVS Group.
Response: ‘No comments’.

Sarala Devi Birla, appointed to Century Textiles board on May 5, 2014.
Wife of B K Birla, chairman of Century Textiles & Industries.
No response to the email sent.

Gauri Kirloskar, appointed to Kirloskar Oil Engines board on June 17, 2014.
Daughter of Atul Kirloskar, chairman of Kirloskar Oil Engines.
No response to the email sent.

Bina Modi, appointed to Godfrey Phillips board on April continued…

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