India: Companies Failing to Appoint Women Directors Will Be Fined

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By Madhur Singh

April 14—The Securities and Exchange Board of India announced April 8 that employers failing to comply with a new rule that all listed companies and those above a certain size have at least one woman on their board of directors will face financial penalties.

Companies out of compliance as of April 1, 2015, will be fined 50,000 rupees ($800), those not in compliance by June 30, 2015, an additional 1,000 rupees ($16) per day, and those not complying by Sept. 30, 2015, an additional 5,000 rupees ($80) per day until they achieve compliance. The fines are not large enough to be a deterrent themselves, and SEBI's intention seems to be to shame companies into compliance.

The Companies Act of 2013 requires every listed company and every public company with a minimum paid-up share capital of 1 billion rupees ($16 million) or an annual turnover of at least 3 billion rupees ($48 million) to appoint at least one woman director. Even though the original compliance deadline of Sept. 30, 2014, was extended to March 31, 2015, some 180 of the 1,456 companies listed on the National Stock Exchange—12 percent–have yet to appoint women directors, according to an April 6 press release from PRIME Database.

In the 829 companies that have appointed women directors, 789 women have been appointed to 861 positions, and at least 363 of these positions have been filled by women related to the promoter (founding) family. According to Pranav Haldea, managing director, PRIME Database, “These women shall have the same voice as the promoter, defeating the very purpose of genuine (independent) gender diversity.”

Near the Bottom

Although some exceptional women have reached top positions in India's corporate world, as reported in Fortune India (, boardrooms remain male-dominated and India ranks 11th from the bottom in the International Labor Organization's ranking of countries' female labor force participation.

In a much-quoted study, Sher Verick, senior fellow at the ILO, points out that Indian women's participation in the workforce follows a U-shaped curve when correlated with education: poor women with little or no education participate out of necessity; those with mid-level education, usually from relatively well-off families, can afford to remain out of the workforce; and only the better educated women are attracted to jobs that offer good opportunities and remuneration.

Leading industry associations including the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry have been running training and mentorship programs for prospective women directors, although human resource experts point out that to ensure entry and retention of women in the workforce such structural changes as government-mandated policies on maternity (and paternity) benefits and structured networking and mentoring programs for women will be required.

To contact the reporter on this story: Madhur Singh in Chandigarh at

To contact the editor responsible for this story: Rick Vollmar at

The SEBI announcement is available at, the Prime Database press release at, and the Fortune India report at

For more information on Indian HR law and regulation, see the India primer.


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