Women Directors and Independent Directors – Companies Act, 2013

The 2nd proviso to section 149(1) of the Companies Act, 2013 states that “such class or classes of company as may be prescribed shall have at least one woman director”

Rule 11.1 in Chapter XI of the Draft Rules states that every listed company shall appoint a woman director within one year from the commencement of the 2nd proviso as above and every other public company having paid up share capital in excess of Rs.100 crores or turnover of Rs.300 crores or more shall appoint a woman director within 3 years from the commencement of the 2nd proviso as above. The words “commencement of the 2nd proviso” as opposed to “commencement of this section” has been written into the Rules probably because government still has second thoughts on the implementation of the provisions regarding mandatory appointment of women directors on the Boards of India Inc. 

Section 149(4) specifies that listed companies shall have one third of its total strength as independent directors and that certain other class or classes of companies as may be specified shall have independent directors as may be specified by the central government. 

Rule 11.2 specifies that public companies having paid up share capital of Rs.100 crores or more or turnover of Rs.300 crores or more or aggregate of loans, debentures, deposits, borrowings of Rs.200 crores should have at least one third of its total strength of the Board as independent directors. This is of course apart from the listed companies’ requirement which has been specified in the Act itself. 

Comparing the provisions of woman director and independent directors on the Boards of companies it is not clear if the woman director is also required to be an independent director, what are the qualifications of a woman director, can she be part of the promoter group. MCA should be more clear on this aspect because it is an important provision and being introduced for the first time in Indian corporate law history. If she is to be considered as part of the promoter group, then it would be better to scrap this provision or not implement it all, because it is going to be a farce with women in the households of the promoter group being routinely given a seat on the Board of Directors and they will virtually not have a say on the affairs of the company. My suggestion would be that woman director should be counted as an independent director if it has to make an impact on the gender representation, women’s role in the Board etc. 

 

2 Comments

Filed under company law

2 responses to “Women Directors and Independent Directors – Companies Act, 2013

  1. sandeep sharma

    I do agree with your suggestion that Women director should be Independent. But are we having enough Women Independent directors on our data base. i doubt. At corporate level we need to maintain a decorum and comfort for the Women directors, it will be a challenge for Indian companies.. Let’s see.

  2. Charlette Machado

    I think this is a much needed mandate put forward by the new Companies Act 2013, Women would bring a lot more to the table, at the same time they should be prepared to handle this responsibility as well.

    I recently came across a workshop that helps women prepare themselves to become a board member. You should have a look at it, sounds informative & interesting ey.com/WomenOnBoard

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