NATIONAL LAW UNIVERSITY ODISHA

CORPORATE LAW I PROJECT- WOMEN DIRECTORS.

ADITYA PRASAD RATH2012/BBALLA/005

ContentsIntroduction-3Women Directors Deepening or the Golden Skirt-3Why concentrate on Woman directors?6Provisions relating to women directors:6Will lady directors make an impact?7Provisions under Companies Act 2013-10Woman director under new companies act-10Number of directorship-10One director to be resident in India-11Independent directors11Conflicting requirements12Appointment of an additional director14Additional compliance requirements for private companies14Liability for Violation of Guidelines Of SEBI-14Conclusion-15BIBLOGRAPHY-17List of Statutes-17List Of Referred Articles And Books-17

Introduction-In the present times the womens are making to the top of the corporate ladder and are sharing shoulders with the men there. Earlier the top positions were dominated by the men and the brass positions were considered as misogynist, but now a days such stigma is falling apart as more and more womens are making to the top level of the company. There are numerous examples of the women who made to the top of the charts of the companies be of Mary T Bara of General Motors or Indira Noori of PepsiCo or Safra .A. Catz of Oracle Group or Marissa Mayer of Yahoo or Meg Whiteman of HP group the list is never ending. Though there has been a massive increase in the number of the female individual has increased significantly but what we need to ask here is that enough? We will look into every aspect incline and laws relating to the of women directors in a company.

Women Directors Deepening or the Golden Skirt-Nobody can blame the SEBI for being unduly harsh on India Inc for its inability to conform to the standard that every single recorded companies must have no less than one woman executive each on their board. The market regulator gave them more than a year's time and will be justified in imposing penalties on the 180 companies that failed to meet the deadline.[footnoteRef:1] More than the penalties, what will hurt these companies is the recognition that they couldn't think less about getting more differing qualities to their boardrooms. [1: As calculated by PRIME Database.]

Sebi's choice was nothing extraordinary. A month ago, Germany joined nations, for example, France, Italy, Belgium and Norway to make it mandatory for extensive firms to have women on their board. A few others have debilitated to force such standards.

Backers of a share for women chiefs refer to the example of overcoming adversity of the 50 every penny booking for women in panchayati raj foundations and how it has changed initiative mentality in India's rural hinterland. Today, there are more than 1.5 million women in these bodies, some of whom have done spearheading work in rural sanitation and women's training and wellbeing issues. The triumphs of this methodology of representation have been very much archived and documented.There are different reasons for the Sebi diktat. Just 5 every percent of board positions were held by women in India's main 100 companies. Indeed, even this doesn't demonstrate the genuine picture since a third of those women's are from CEOs are from promoter families. On the off chance that they are taken out of the comparison, the number would drop radically.

These are legitimate contentions, however two inquiries (raised by two women CEOs) rise:[footnoteRef:2] One, "Is feminism about the equal treatment of men and women, or the elimination of merit-based appointments?" And two, "Will a knife of quotas at your throat help in achieving women empowerment in boardrooms?" [2: Shyamal Majumdat, Business Standards.]

The answers to these questions are obvious;Give us a chance to first see the foolish route in which corporate India conformed to the Sebi standards. A large portion of the companies made a complete joke of the request by enrolling wives, girls and even stepmothers, as indicated by a report by the Thomson Reuters Foundation, which included that more than a large portion of the companies have named their relatives onto the board, who will talk in the same voice as their promoters and along these lines, the assorted qualities being looked for by Sebi has been crushed.

Returning to the inquiries raised by the two women CEOs. It can well be contended that a standard for boardroom representation is, by its extremely definition, a hostile to meritocratic methodology. Aside from the outlook issue of promoters who need to pack the board with their relatives - irrespective of their sex - a share would compel companies to jump for the same little pool of qualified women. As it seems to be, the availability of able chiefs, irrespective of their sex, is a basic issue in India. A standard can exacerbate this.

There is likewise no proof from other nations' experience to recommend that quotas have streamed down to help women on the lower rungs of the stepping stool. They haven't prompted more women in official suites and upper management occupations and haven't enhanced pay fairness. The accord among senior women administrators is by all accounts that while companies must distinguish and uproot any boundaries to female cooperation in senior parts, the legislature or the controller should not be telling companies what number of women ought to sit on their sheets on the grounds that that augments way past any sensible limit of corporate regulation.

And the individuals who feel cheered by the accomplishment of women's reservation in panchayats would do well to peruse the accompanying information point also. An evaluation by the US Population Division said India's women work cooperation rate is just higher than Fiji's in a rundown of 14 Asia-Pacific countries. The greater issue is the social and social attitude in India where women are routinely oppressed. For the most recent proof, read what Lalu Prasad Yadav needed to say on Thursday in regards to his party's progression arrangement. The father of seven girls and two sons said, "Who else however my child as my successor?" Tokenisms like a share for women chiefs will scarcely help and there's a peril that some of these executives would be nicknamed the "golden skirts" who have arrived at this position not by legitimacy but since of an administrative diktat. That would be the best damage to the women who are sufficiently able to stroll into a boardroom even without a portion set up.

Before going any further let it stand clarified that the reason for which this project started with the point of problem is that this project is to renounce the issues related in the promotion and highlight the same. Now moving on to the next part about what is the need to focus on women directors and what are the provisions laid for them.Why concentrate on Woman directors? It is very fascinating to note certain facts about women directors from the measurements. As per "Impetus" a non profit research association in America, a considerable lot of the Fortune 500 companies which have most astounding representation of women directors on board have accomplished better money related execution than those have less representation of women executives on Board. Yet in US women held around 17 % of the board seats of Fortune 500 companies in the year 2012. In UK it is 19% .In Norway it is shockingly 41 %. In India it is about 7% of the chiefs on recorded companies which is an extremely dreary percentage. Pushed given by the New Act, 2013 is unquestionably going to help in enhancing the representation of women directors on the board.[footnoteRef:3] [3: Anu Raghunathan Contributor, Forbes Contributors]

Provisions relating to women directors:Proviso to Section 149(1) stipulates that Companies with such criteria to be announced shall appoint woman directors. Rules currently displayed on the MCA[footnoteRef:4] web site for comments indicate the following for appointment of women directors on the boards of companies: [4: Ministry of Corporate Affairs.]

a. Every listed company shall appoint at least one woman director within one year from the commencement of the second proviso to Section 149(1).

b. Every other Public company:

- having paid up capital of 100 crores or more or

- a turnover of 300 crores or more have to compulsorily appoint within 3 years from the commencement of second proviso to Section 149(1) of the Act.

Time limit of one year is provided to fall in line with the new requirement. A search for right kind of women directors has to be made and it is certainly a time consuming exercise.Other necessary requirements under the Act-As per section 152(5), every person including a woman director who has been appointed to hold the office of a director shall on or before the appointment furnish to the company consent in writing to act as such in Form No. 11.2 and comply with requirements for filing of consent on MCA portal. Woman director proposed to be appointed has to obtain DIN and shall give a declaration that she is not disqualified to be appointed as a director. Other relevant provisions are as follows provisions relating to appointment of directors. The relevant Section is 149 of the Act,2013. It deals with the provisions relating to appointment of directors and matters such as the minimum and maximum number of directors, type / class of directors to be appointed. Elaborately it dealt with attributes of an independent directors and time limit of one year within which the provisions have to be complied with for achieving employment of woman directors and minimum number of independent directors on the board.Will lady directors make an impact?

Lots of women are possessing key posts in numerous companies and private banks. Women to be specifically pointin, Nainalal Kidwai, Chanda kochhar, Sheekaswarup, Kalpana Morparia have earned a notoriety for driving effectively the banks as officials can likewise have an effect as lady directors. There is inconceivable ability yet the mentality of corporate world has to change the approach to select lady directors. With this required procurement for representation to women on the Boards, India Inc is prone to have more gifted lady on the boards of their companies. Gender predisposition has stopped numerous companies to enlist women directors on their Board. Presently with the new Act obliging an obligatory arrangement of no less than one lady chief, companies will need to look down great lady directors inside the time span permitted. There are around 6000 recorded companies on the stock trades and it will make a interest for lady directors and every skilled women found will extend themselves to speak to whatever number companies as could reasonably be expected to meet the necessities.Numerous new standards, including obligatory necessity of designating women directors, have came into power from April 1 for companies as significant move timetables have closed recently. The standards, some piece of the Companies Act, 2013, whose most procurements became effective from April 1 last year. Corporate Affairs Ministry, which is actualizing the Act, had given move time to qualified substances to agree to specific standards. Certain class of companies are obliged to have no less than one lady director on their boards.

"In executing the Companies Act, 2013, companies were given an one-year time period to follow a portion of the necessities, for example, instigation of free directors and women directors, setting up of panels of the board... These necessities will now get to be material from 1 April, 2015, on expiry of the move timetables," .[footnoteRef:5] [5: Sai Venkateshwaran, Partner and Head, Accounting Advisory Services, KPMG India.]

Move time was additionally given to consistence concerning setting up of review board, assignment and compensation council, and agreeability with points of confinement on directorships, among others. Under the Act, an open organization ought to have no less than three directors, while the necessity is of two directors for privately owned businesses. Other than recorded companies, other open elements having paid up offer capital of Rs 100 crore or more and a base turnover of Rs 300 crore are obliged to have no less than one lady executive on their boards. For consistence, the Act gave one-year time that closures. Two free directors are necessary for open companies having at any rate Rs 10 crore paid up capital and those with at least Rs 100 crore turnover, among others. The standard would likewise be material on open companies which in total have "extraordinary credits, debentures and stores, surpassing Rs 50 crore".More than half the listed companies in the country have yet to comply with Sebi's mandate to have at least one woman director by October 1. This means India. Inc needs to appoint an average of 25 women to company boards every day this month.According to an estimate by PRIME Database, 755 out of a total 1,469 companies listed on the NSE, or 51%, did not have a woman director as on August 31.[footnoteRef:6] [6: India Inc yet to comply with Sebi's mandate on women directors, Econommic Times. ]

At least 65 companies rushed to comply with the Securities and Exchange Board of Indias directive to appoint a woman director on their boards on the last day of the grace period which ended on Tuesday.Even after that, at 7.30 pm on Tuesday, it still leaves 248 firms, or one out of every six firms listed on the National Stock Exchange, without a lady director, according to data compiled by Prime Database. Some company board meetings will extend well into the night and it is possible that some of these firms may still make the cut before the deadline expires midnight.This rush has come about despite Sebi extending the deadline by six months for meeting the quota for women directors. The rush became all the more pronounced after Sebi chairman UK Sinha on Monday warned firms about very serious consequences if they fail to meet the norm.[footnoteRef:7] [7: ENS Economic Bureau | Published on:April 1, 2015.]

About 33% of recorded Indian companies don't have a woman director on their boards. The Securities and Exchange Board of India has mandated that recorded companies ought to select a woman director on their boards by April 1. In any case starting now two weeks short of that due date 451 of the 1,479 companies recorded on the National Stock Exchange have not met the prerequisite. In the event that all companies are to be agreeable, 30 women directors would need to be named ordinary for the following 15 days. This is clearly not going to happen. "Be that as it may throughout the following 15 days we will see a ton of arrangements,"[footnoteRef:8] giving data on recorded companies. "In any case the inquiry is whether it will be authentic, from the perspective of enhancing differences, or on the off chance that it will simply be lip administration. Companies need to accept that having qualified autonomous women will enhance their boar. [8: Pranav Haldea, overseeing director of PRIME Database, which runs www.nseinfobase.com]

Provisions under Companies Act 2013-The new companies act 2013 makes several new provisions for Directors and also lays down several new guidelines. Below are some important highlights from the Companies Act 2013 for directors and companies. The Indian boardroom is definitely changing for the better with these new rules and recommendations. Woman director under new companies act-The category of companies which need to comply with the requirement of having at least of one woman director are as follows:[footnoteRef:9] [9: section 149(1) of Companies Act 2013 ]

(i) Every listed company, within one year from the commencement of second proviso to sub-section (1) of section 149.(ii) Every other public company that has paidupshare capital of one hundred crore rupees or more, or a turnover of three hundred crore rupees or more within three years from the commencement of second proviso to sub-section (1) of section 149.While this new requirement will go a long way in encouraging genderdiversity, it has already created quite a stir in the manner in which companies will ensurecompliance. Number of directorship-The 2013 Act increases the limit for number of directorships that can be held by an individual from 12 to 15.[footnoteRef:10] [10: Companies Act, 2013]

One director to be resident in India-A new requirement with respect to directors is that at least one director to have stayed in India for at least 182 days in the previous calendar year.[footnoteRef:11] This necessity has all the runaway of being a departure from the law given in the 2013 Act towards utilization of electronic mode, for example, utilization of feature meetings for gatherings and electronic voting. With the expanding utilization of electronic media, the need, for a director to be occupant in India for a base measure of time, gets to be repetitive. [11: Sec 149 to Companies Act 2013.]

Independent directorsOne of the significant aspects of the 2013 Act is the effort made towards incorporating some of the salient requirements mandated by the SEBI in clause 49 of the listing agreement in the 2013 Act itself. To this effect, the 2013 Act requiresevery listed public company to have at least one-third of the total number of directors as independent directors. Further, the central government in the draft rules has prescribed the minimum number of independent directors in case of the following classes of public companies.[footnoteRef:12] [12: section 149(4)Companies Act 2013.]

(i) Public companies having paid up share capital of 100 crore INR or more; or(ii) Public companies having turnover of 300 crore INR or more(iii) Public companies which have, in aggregate, outstanding loans or borrowings or debentures or deposits, exceeding 200 croreINRThe 2013 Act also states that companies will have a period of one year to ensure compliance with the 2013 Act and the Rules that are framed.

Conflicting requirements

While there have been endeavors to orchestrate the necessities of SEBI and the 2013 Act was made, there are a few perspectives identifying with autonomous directors where the prerequisites of the 2013 Act vary from that of condition 49 of the value posting assention. The prerequisites of the 2013 Act and the way in which they contrast from those under the condition 49 of the value posting understanding incorporate the definition itself. The other fundamental contrasts are as per the following:

Clause 49 does not oblige the board to practice its judgment and opine on whether the free director is an individual of respectability or has significant ability or experience. This prerequisite postures troublesomely as far as the way in which honesty of an individual can be surveyed by the board.

Clause 49 does not oblige examination of the autonomy of the relatives of free directors. Broadening the preclusion of the free directors to consider the monetary relationship of the relatives would posture pointless hardship for the autonomous directors.

The capability of the autonomous director has been left to be determined later.

The 2013 Act brings the constitution of the board in India at standard with other worldwide capital markets i.e., by mandating no less than 33% of the board to be autonomous directors if there should be an occurrence of recorded companies. While, the SEBI prerequisites are the place the director of the board is a non-official director, no less than 33% of the board ought to embody free directors and where the non-official administrator is a promoter of the organization or is identified with any promoter or individual involving administration positions at the board level or at one level beneath the board, no less than one-50% of the board of the organization might comprise of autonomous directors.Differing compliance requirements with respect to the appointment of independent directors, remuneration thereto, imposed by multiple regulators will lead to hardship as well increased cost of compliance for companies.[footnoteRef:13] [13: ET Bureau Sep 3, 2014, Economic Times]

The 2013 Act limits the tenure of office of an independent director to a maximum of two tenures of five consecutive years, with acooling-off period of three years between the two tenures. During the cooling-off period of three years, should not be appointed in or be associated with the company in any other capacity, either directly or indirectly.[footnoteRef:14] [14: proviso to section 149(11) of 2013 Companies Act]

It is also relevant to note that the MCA had released the corporate governance voluntary guidelines in 2009, which permitted three tenures (with other conditions similar to those discussed above) for an independent director while as per the clause 49 of the equity listing agreement, an independent director cannot serve for more than nine consecutive years.Stock options: As per the 2013 Act, an independent director will not be eligible to get stock options but may get payment of feesand profit linked commission subject to limits specified or to be specified in the rules []. This again, is in contradiction with SEBIs requirements, whereby for the purpose of granting stock options, the term employee includes independent directors also.[footnoteRef:15] [15: section 149 (9) of 2013 Companies Act]

Appointment of an additional director-It is pertinent to note that, in order to discourage inappropriate practices, the 2013 Act states that any person who fails to get elected as a director in the general meeting can no longer be appointed as an additional director by the board of directors.[footnoteRef:16] [16: section 161 of2013 Companies Act]

Additional compliance requirements for private companiesThere are certain increased compliance prescribed by the companies act which are the requirements mandated for private companies which, till now, were mandated only for public companies and private companies which are subsidiaries of public companies which have to be followed strictly. These include the following: Appointment of director to be voted individually[footnoteRef:17] [17: Sec 149 Companies Act 2013]

Option to adopt principle of proportional representation for appointment of directors.[footnoteRef:18] [18: Chapter XI of companies act]

Ineligibility on account of non-compliance with section 274(1)) (g) now extended for appointment or reappointment as a director in a private limited company also.

Liability for Violation of Guidelines Of SEBI-SEBI has requested that stock trading firms to impose fine recorded firms that have not named a woman director on their boards before the 31 March due date.

Companies that missed the due date however delegate a woman director before 30 June will need to Rs.50,000 as fine, the Securities and Exchange Board of India (Sebi).

Firms that does as such between 1 July and 30 September will need to pay Rs.50,000 in addition to Rs1,000 a day from 1 July to the date of consistence.

Companies that consent to the standard after 1 October will need to pay Rs.1.42 lakh alongside a fine of Rs.5,000 a day from 1 October till the date of consistence. On 17 April a year ago, Sebi had requested every single recorded firm to have an ideal blend of official and non-official directors with no less than one woman director. On 15 September, the course of events to agree to the standard was stretched out to 31 March 2015. There are 168 companies without a woman director out of 1,484 companies recorded on the National Stock Exchange (NSE).On 31 March, 180 NSE-recorded companies did not have a woman director on their boards, as indicated by Prime Database, a capital business sector tracker. Of these, no less than 32 open segment firms did not have any woman director. On 1 April, around 832 women have been named to 912 directorship positions in 872 companies, as indicated by Prime Database. Referring to these records, Press Trust of India had given an account of 6 April that of the 872 companies, 43 companies as of now had a woman on the board before the Sebi rule was reported yet designated a second woman director on their board. Of the staying 829 organizations that conformed to Sebi's standards, 278 did as such in March.Conclusion-Arrangement of Women Directors consistence with statement 49 (II) (A) (1) of Listing understanding and Section 149 of Companies Act, 2013.As we are very much aware that SEBI vide its roundabout dated 17th April, 2014 has made it mandatory for all the recorded companies to delegate atleast one Woman Director on their Board of Directors by 31st March, 2015 in arrangement with the necessity of Section 149 of the Companies Act, 2013, under corporate administration standards. All the companies have to abide to it without fail.SEBI is intense on the agreeability to these standards and has proactively looked for the action launched to guarantee consistence with the previously stated necessity for the companies that are yet to select a Woman Director on their board. On command of the SEBI, all the companies are instructing their professional partners to notify their Board of Directors to choose at least one Woman Director on their Board by 31st March, 2015, if not yet delegated, to consent to the previously stated obligatory prerequisite of SEBI.Though there are provisions prescribed by the SEBI but it is to see that the level of implication of the rules as mentioned the golden skirt policy is what this is all about or just an act of sham for the companies. Till now the reports says that 51% of companies are yet to abide to it.

BIBLOGRAPHY-List of Statutes-1. Companies Act, 20132. SEBI GUIDELINES issued on February 2015. List Of Referred Articles And Books- 1. ET Bureau Reports2. Associated Press Reporter3. Times News Network4. Reuters Network5. Book on Companies Law, Majumdae and Kapoor, Taxmann, 18th edition