It is universally acknowledged that a society cannot prosper without making women educated and empowered. A nation’s competitiveness in the long run, inter alia, depends significantly on how it educates and trains half of its talent base. Hence, in recent years, the focus of many countries has shifted from equipping women for their traditional roles of housewives and mothers to recognizing their worth as producers, partners and partakers making a major contribution to the family income and welfare. Research evidence reveals that women reinvest up to 90 per cent of their earnings in their families and communities leading to the realization that increasing women’s economic participation contributes to the improved health and well-being of future generations. With the advent of women’s economic empowerment and changes in socio-cultural aspects today, women have proved their strength of managerial and entrepreneurial skills. They have played and continue to play vital roles in society and economy- from family matriarch to caregiver, to wage earner, to political leaders, to policy and decision-makers. International Trade FORUM reports that, in the coming decade, one billion women around the world could enter the mainstream economy as producers, consumers, employees and entrepreneurs. Pertinently, corporations like Goldman Sachs, Coco Cola and Google have established initiatives to promote women’s economic empowerment.
The Global Scenario: Thewomen of the world have been affected more by poverty, lack of opportunitiesand facilities owing to the innate discrimination prevalent in almost allsocieties. They do not have an equal status with men. The disparity between menand women is reported to be so glaring that women perform about 60 per cent ofworld’s work; they earn just 10 per cent of the world’s income. On an average,women all over the world are paid 30 to 40 per cent less than men for samework. According to a study while women are joining the workforce in increasingnumbers in many countries, their wages are between 70 per cent and 90 per centof men’s wages in most cases. There continues to be growing recognition that inthe economic and job creation arena women represent one of the last pillars ofuntapped potential. Reportedly, more than 80 per cent resources of the worldare accessible to only 25 per cent of the world population, that is, thedeveloped countries. On the contrary, 75 per cent of the world population hasaccess to only 20 per cent of the resources. The main reason behind thisdisparity is the disparity of access to knowledge. This is more so because,over the years, many regions across the globe have failed to promote theparticipation of women as equal partners with men in achieving educationalprogress and access to knowledge.
During the past four decades, there hasbeen a global effort with a string support from the world bodies like the UNOto understand and eliminate discrimination against women and restore a statusto them. The United Nations General Assembly declared 1975 as the InternationalYear of Women, which brought about a great renewal of interest in women’sstatus and development. It also organized four International Women’sConferences– in 1975 at Mexico, in 1980 at Copenhagen, in 1985 at Nairobi andthe last one in September 1995 at Beijing; this was followed by a series offive-year reviews. All these conferences have sharply brought to the focus thegender issues. However, the Beijing Conference emphasized that no enduringsolution to the society’s most threatening social, economic and politicalproblems can be found without the full participation and full improvement ofthe issues concerning women like economy, governance, human rights, peace,security, science, technology, religion and education. It may be noted that thereview held in the year 2015 studied progress made in the 20 years since theadoption of the Beijing Declaration and Plan of Action; concludedimplementation of the Millennium Development Goals and crafted a newdevelopment agenda–the Sustainable Development Goals. In 2015, while drawingon data provided by 164 UN member states, the report of the UN SecretaryGeneral to the omission on the Status of Women identified four major trends ingovernment action to address gender inequalities since 1995:
Increasing gender equality in employmentthrough law and practice;
Supporting women farmers and other womenliving in rural areas;
Addressing the needs of self-employedwomen and women entrepreneurs; and
Enhancing women’s voice in economicgovernance.
Notably, in 2015, world leadersparticipated in the Special Summit on Sustainable Development at the UN andwere as determined as the delegates in Beijing were in 1995. They agreed andput women’s rights and empowerment at the centre of the new global developmentagenda.
Despite such laudable efforts on thepart of the world-body, it is distressing that the declared policies andprogrammes are not implemented and a good majority of women, especially in thedeveloping countries, are not aware of the benefits conferred on them by thesedeclarations. However, it is gratifyingthat since the Fourth World Conference on Women in Beijing 23 years ago; manycountries have taken significant steps to advance women’s rights andempowerment. New laws, initiatives and campaigns are helping to curbdiscrimination and violence against women and girls. Most countries haveachieved or are close to achieving gender parity especially in primaryeducation. Many have gone further laying the ground for women’s equalparticipation in government, economies and societies. The Beijing Conferenceand the Platform for Action it established, have inspired many more to act.That outcome marked a significant turning point for even the global companiesfor gender equality agenda.Indeed, there is now a strong business case for Women in Corporate Governance.Several countries such as Norway, Belgium,France, Iceland, Italy, Germany, Spain, Malaysia, United Arab Emirates,Netherlands, Austria, Israel and Finland have made it mandatory for inductionof women directors on corporate boardrooms. However, many countries are yet tohave any gender quota systems.
The Indian Scenario: Asstated earlier, in recent years, momentum has been gathering all over the worlddemanding gender equality and push for equal representation of women in allspheres of activity including political, cultural, educational, economic andcorporate governance. In India too, women’s active participation in varied andnumerous social, political, economic and business activities has been ofinterest for several years. This has been reflected in the reports of variousCommissions, Committees, Missions, Policies and Acts. The Indian constitutionenshrines with provisions which deal with the importance placed for women inworkplaces too and that women do have equal means of livelihood as compared tothat of men. Other recognition includes provision for equal pay for equal workcarried out by a woman, maternity relief and such other provisions. In spite ofthese concerted and policy proclamations, the country has low femaleparticipation in all spheres of social and economic activities especially ingiant business and corporate houses. However, it is a matter of greatsatisfaction that there are now an increasing number of national andmultinational corporations exploring how their policies and programmes canempower women as a core part of their business strategy/policy. This being so,an important development in recent times has been to empower women in Indian ‘ListedCorporations’ by ensuring their sufficient participation in decision-making andgovernance at Board levels. Gender diversity in boardrooms is being stronglyadvocated by many simply because of the difficult economic climate of financialcrisis, corporatescandals/scams and poorcorporate governance that plagued the financial sector’sreputation in recentpast and adversely affected our corporate houses. There is ample researchevidence that women are more assertive on corporate governance issues. Studieshave found that companies run by women outperform others. The other reportedbenefits of talent/thought diversity in the Corporate Boards are:
Betterbusiness results;
Strongfinancial performance;
Abilityto attract and retain top talent;
Heightenedinnovation;
Enhancedclient insight;
Strongperformance on non-financial indicators; and
Improvedboard effectiveness and efficiency.
Promotingbetter gender representation at board level is expected to go a long way inbringing transparency, accountability, efficiency, effectivegovernance and improved business performance thus curbing corporate frauds,scandals and contain Non-performing Assets (NPAs) to a larger extent. TheUS-based management consultancy ‘Catalyst’ reported that companies with asignificant participation of women in top management achieved 34 percent higherreturns. Studies have also shown that women tend to be more risk aware than menand are also the primary decision makers for consumer goods in 85 percent ofhouseholds. A study about the ‘Return on Equity (ROE)’ data of 100 top IndianCompanies has shown that companies with women on their boards have a positiveimpact on their ROE. It is also argued that greater boarddiversity increases a company’s competitive edge when compared to those withless diversity in their boardrooms.
TheRegulatory Framework: Indiais perhaps the first country among the developing nations that has chosen tomake representation of Women on Company Boards mandatory through the regulators-the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Boardof India (SEBI).
Inan effort to improve corporate governance and correct imbalance in theboardrooms, the Ministry of Corporate Affairs (MCA) in the Companies Act, 2013(Chapter XI, Section 149) introduced the concept of appointment of a WomanDirector in the Company Boards. The Act requires that one-third of a company’sboard comprise independent directors, and that atleast one board member be aWoman.
Accordingto Companies (Appointment and Qualification of Directors) Rules, 2014 (Rule 3),the following class of company shall appoint atleast One Woman Director:
Everylisted company;
Everyother public company having (a) paid up share capital of Rs 100 Crores or more;and (b) turnover of Rs 300 Crores or more.
TheSecurities and Exchange Board of India (SEBI), in February 2014, announced thatall listed companies to have mandatorily at least one Woman Director on theBoard as early as September 1, 2014. Subsequently, the time limit was extendedto March 31, 2015 and again later to September 30, 2015 (now under the KotakCommittee Report and new norms by April 1, 2019 the top 500 companies and byApril 1, 2020, the top 1,000 companies will have to appoint at least One WomanIndependent Director).Accordingto Clause 49 of the Listing Agreement the Board of Directors of the companyshall have an optimum combination of executive and non-executive directors withatleast One Woman Director and not less than 50 per cent of the Board ofDirectors comprising non-executive directors.
Thus, the law hasobliged Indian listed companies to put Women into Directors’ seats previouslyoccupied by men. This is evident from the report of Indian Boards Database (http://indianboards.com/pages/index.aspx), a joint initiative of Prime Database and NSE, according to whichthere are 11,227 persons occupying a total of 15,178 directorships inNSE-listed companies. Of these, 2,426 positions are held by women, asignificant 15.98 per cent compared to December 2014, when it was only 8.9 percent. Thus, the diversity position seems to have improved over the last fouryears.
TheJ&K Scenario:In our State, J&K Bank till recently being the only listed company, hasalready instated a ‘Woman Director’ on Bank’s Board thuscomplying with the provisions of the Section 149 of the Companies Act 2013 andin pursuance to Clause 49 of the Listing Agreement governing CorporateGovernance. In fact, while conducting the Secretarial Audit for the financialyear 2014-15, the issue of appointing a Woman Director was raised and taken upby the auditors with the key managerial personnel of the Bank. Naturally, theBank Management woke up to the issue and fulfilled the statutory requirement.It may be indicated here that many women in banking entities have risen to thetop by dint of their hard work essentially because the banking sector isconducive for growth of women executives. The same is true of J&K Bank.Many competent and professional females are currently associated with thisBank. In future, therefore, while making the appointment of a ‘Woman Director’,the purpose should be to find the best, most capable, dynamic, committed andqualified woman, especially female chartered accountant/company Secretary, whocould help bring the organization to greater heights.
Recently,another Jammu-based company ‘Sarveshwar Foods Ltd’ (registered in 2016 andengaged in the business of processing and marketing basmati rice among otherproducts) also became the first small and medium enterprise (SME) from thestate to make its debut on the capital market by getting listed on the NationalStock Exchange. The Company reportedly is also having Woman Director/s on itsBoardroom.
Inshort, numerous policies and enactments during the past few years haveguaranteed meaningful representation to women at all levels of decision-making:educational, social, political, financial and now in corporate governance. Theobjective of incorporating ‘Women Directors’ in Indian Companies is a means toempower them by ensuring sufficient participation of women in decision-makingand governance at Board levels.
This writer is a formerCommerce teacher.
manshah7@rediffmail.com