In the quest for gender parity in corporate leadership, one of the significant regulatory changes in India was the mandate that at least one woman director must sit on the board of every listed company. This rule, introduced in 2013, was intended to be a stepping stone towards greater gender diversity in the corporate world. However, according to former SEBI chairman M. Damodaran, it has largely become a token appointment rather than an effective means of promoting diversity.

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"If you look at the provision that you must have at least one women independent director, most companies have only one," says Damodaran. "In fact, in companies, sometimes when the lady enters the room, somebody says 'our independent woman director'. There's nothing called a woman director. A director is a director," he told CNBC-TV18.

Damodaran, who has been an advocate for gender diversity in boardrooms, believes that it may be time to mandate two women directors on every board. He argues that having two women in the boardroom would be "several times better than one, it's not just twice better, but several times better than one".

The introduction of the one-woman director mandate was a significant step towards addressing the gender imbalance on corporate boards in India. However, it hasn't yielded the desired results.

Damodaran added, "Do (women) add value? They add as much value as everybody else does. Some of them are very good; they ask the right questions."

According to the latest data from the Ministry of Corporate Affairs, as of the end of the 2023 fiscal, 4,741 women held directorship positions in 3,232 listed companies across the country.

In contrast, by the end of the fiscal year 2019, there were 3,941 women directors in listed companies. This number increased to 4,054 by the end of FY20 and further to 4,187 by the end of FY21. The trend continued, with 4,450 women directors serving on the boards of listed companies by the end of FY22.

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Damodaran also pointed out the limitations of the "old boys' club mentality" that often prevails in corporate boardrooms. Encouraging more women to join these boards can help challenge and diversify traditional perspectives, he said.

He said having just one woman director is a disservice to women, as it merely carves out a token space for them in the boardroom, rather than promoting genuine gender diversity. "Of the 10 directors of the board, one will be a woman — this is not gender diversity, if you ask me," Damodaran said.

When the rule was introduced, it raised concerns among experienced and accomplished women leaders who had already served on boards for many years. According to Damodaran, six such women reached out to him, expressing their concerns about being approached by companies looking to fill the one-woman director slot.

Damodaran's advice to them was simple: "Ask them one question — 'Are you getting me on the boat to tick the box? Then go and find somebody else. Because I think you don't need me; find somebody else.' If the answer was, 'No, no madam, we think you are going to add great value, etc, then you must ask the next question — 'Why didn't you think of me before the reservation came?' and then they have no answers."

Official statistics also reveal that 35 listed companies still lack women on their boards. On the other hand, 33 listed companies have a majority of women on their boards. Additionally, 618 listed companies have boards in which women accounted for 30% of directorships.

India has set the goal of realising gender equality by 2030 as part of its commitment to sustainable development.

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(Edited by : Shoma Bhattacharjee)

First Published:Nov 3, 2023 8:03 PM IST