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Gender diversity has been a part of a larger global discourse in the past few decades. The rise of the feminist legal theory has brought every regime of law under the scrutiny of the world, and corporate law is no different. While gender disparity scandals in corporate bodies are not unheard of, it becomes alarming when such issues are viewed in light of the frequently disregarded corporate governance policies established in this field.

The policies brought in by the Indian Government and the Securities and Exchange Board of India (SEBI) have led to a rise in the number of female Board members in India from a disappointing 5% in 2013 to a passable 15% in 2019. It is common knowledge that Indian companies usually do not recruit more women in their Boardrooms than what is required. 60% of the Nifty-500 firms had only one woman on board in 2019, a legal requirement that they had to fulfil. Further, a lowly 2.2% of the Nifty-500 firms had more than three women on their board in 2019, and the number of female CEOs was less than 5%. Despite various studies noting a positive correlation between the number of females on important posts and the firm’s performance, India is yet to pay heed and induct more women than what the threshold requires. According to the National Stock Exchange Infobase (up till 21.04.2021), there are currently just 2044 women directors in NSE-listed companies out of a total of 11416 directors, while 75 NSE-listed companies do not have women directors on their Boards at all.

With regards to the above, this article aims to highlight the present regime of gender diversity in Indian boardrooms and the shortfalls in this framework. The article further puts forward suggestions to bring in gender diversity in the Indian corporate structures.


(a)  The Companies Act, 2013, through Section 149(1), mandates certain classes of companies to have at least one woman director and lays the groundwork for heralding adequate gender representation in Indian boardrooms.

(b)  The Companies (Appointment and Qualification of Directors) Rules, 2014 elaborates upon the statutory provisions under the Companies Act and mentions the classes of companies that should have at least one woman director. Rule 3 of these Rules specify those classes as-

  1. Every listed company.
  2. Every other public company having either (i) a paid-up capital of INR 100 crores or more, or (ii) a turnover of INR 300 crores or more.

A company coming under these Rules is given six months from the date of its incorporation to comply with the provisions. Moreover, in a situation where a woman director has resigned, the company has to appoint the replacement as soon as possible but must not go beyond 3 months or the next meeting of the Board, whichever comes later.

(c) Section 450 of the Companies Act pertains to “punishment where no specific penalty or punishment is provided”. It provides a structure of fines for companies, officers of such companies or any other person involved, extendable up to INR 2 lakhs for companies and INR 50,000 for individuals or officers.

(d) An Equity Listing Agreement gets formed between the stock exchange and the entity that is being listed on it. This agreement mainly seeks to ensure that good corporate governance practices are followed by these entities. The stock exchange on part of the market regulator SEBI makes sure that listed companies abide by the agreement. Clause 49(II)(A)(1) of the agreement directs the Board of Directors (BoD) of the company to have at least one female director. A circular dated 08.04.2015 issued by SEBI prescribed a fine structure for not complying with Clause 49(II)(A)(1) of the Equity Listing Agreement.

(e) Securities and Exchange Board of India (SEBI) has several regulations meant for governing and regulating listed companies, one of them being SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Regulation 17(1)(a) states that a listed entity should have at least one woman director on its Board.

For smooth implementation of these Regulations, SEBI released a circular dated 22.01.2020 on streamlining of fines for non-compliance of listing obligations and disclosure requirements (LODR) by listed entities and standard operating procedure (SoP) for suspension and revocation of trading of specific securities. A fine of INR 5000 per day has been prescribed in Annexure I of this circular for a listed entity’s non-compliance with the provisions of Regulation 17(1). According to Annexure II, non-compliance and non-payment of the fine may lead to shares of the promoter(s) being frozen. Not complying with the provisions of Regulation 17(1) for two quarters consecutively can lead to the scrip (share/stock of a listed entity) of the company being put in Category Z, meaning that the scrip has been temporarily banned from trading and cannot be handled intra-day. Therefore a “trade for trade” basis is used to trade such scrip, but only on certain days which the regulator shall specify. In this context, several companies were fined under a previous version of these SOPs released in 2018 for non-compliance with the Regulations.


On the basis of the above stated regulatory framework, the author has observed certain issues which could help move the mandate towards actual equality rather than just being a legal requirement to display representation.

(a) The Ministry of Corporate Affairs, through a notification dated 04.01.2017, excluded “Specified International Financial Services Centres (IFSC) Companies” from the purview of the second proviso given in Section 149(1) of the Companies Act. The basic purpose of this notification was to reduce statutory compliances/hurdles that specific IFSC Companies have to tackle. Exempting them from the provision of appointing a woman director in a notification that aims to reduce statutory hurdles essentially reduces the weightage of representation of women in Boards of  Directors to a mere statutory formality.

(b) The second proviso of Rule 3 of the 2014 Rules direct the Boards to fill up any intermittent vacancy of a woman director as soon as possible but not later than the next Board meeting or three months from the date of the beginning of vacancy, whichever comes later. There can be a maximum gap of 120 days between two board meetings. Hence, any intermittent vacancy of a woman director must be filled up by the Board between 90-120 days. However, Paragraph 2(a) of Annexure II of the SEBI circular dated 22.01.2020 allows listed companies a window of 180 days, i.e. two quarters, to not comply with LODR Regulation 17(1) before action is taken to suspend trading of shares of that particular entity. Such time duration given in the circular should be reduced to align it with the duration given in Rule 3.

(c) Though the provisions for independent directors as well as women directors are corporate governance measures, there is an incongruity in these that is apparent. Rule 3 of the Rules directs that every public company with either a paid-up capital of INR 100 crores or above that or a turnover of INR 300 crores or above must appoint at least one woman director. Rule 4 directs that every public company with either the paid-up share capital of INR 10 crores or above or turnover of INR 100 crores or above must have independent directors. Therefore, in order to broaden the base of companies that have to compulsorily uphold gender representation, it is suggested that the pecuniary minimum limits in Rule 3 should be lowered to a level similar to that in Rule 4, and this can be done in a phase-wise manner.

(d) Presently, the Companies Act, the 2014 Rules, as well as the SEBI Regulations mandate having at least one woman director. But such clauses will only be effective in improving gender equality in Boardrooms when the number of women there is substantial, and not just one, regardless of it being a 10-member or 30-member boardroom. Therefore, to improve women representation, such provisions can be revised to mandate a proportion or a fraction of the Board to be consisting of women.


The aforesaid discussion indicates that while a holistic framework has been brought in place in the country to encourage the representation of women in important positions at corporate organisations, there is still a stark difference between the goals of these measures and the ground realities, as indicated by the latest figures provided by the NSE. Modification and strict implementation of the above framework are urgently required to improve compliance and coverage rates.

Author(s) Name: Prashansa Singh (Dr. Ram Manohar Lohiya National Law University, Lucknow)

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