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Companies find boosting gender diversity in boardrooms a tough call

The Institute of Company Secretaries officials told dna that many companies have made requests to the ministry seeking an extension till September 30.

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Finding it extremely difficult to locate suitable women directors and boost gender diversity in their boardrooms, several companies have now knocked at the doors of Ministry of Corporate Affairs, seeking more time to comply with rules.

Institute of Company Secretaries officials told dna that many companies have made requests to the ministry seeking an extension till September 30.

For instance, multinational giant Philips has told the government it is yet to get a suitable woman candidate despite its efforts and has requested for an extension till September 30. Its request follows a show-cause notice dated June 23 from the Office of Registrar of Companies, Kolkata asking why the company hasn't appointed a woman director yet.

Philips then submitted its response with the ROC's office on July 9 citing the "difficulties it had faced with respect to identifying a suitable woman candidate for appointment in compliance with the requirements of Section 149 of the Companies Act, 2013". The company, to buttress its claim, also provided extract of minutes of the board meetings, where the issue was oft discussed.

Though announced way back in February 2014, corporate India was slow in complying with the new norms, forcing Securities and Exchange Board of India (Sebi) to stretch the initial deadline of October 2014 to March 31, 2015, asserting that the consequences will be very serious if the final deadline is breached. Following this, in July, Bombay Stock Exchange (BSE) slapped fine on 530 listed companies for failing to meet the deadline to boost gender diversity in their boardrooms.

"It's not Philips alone. There are many companies which are yet to appoint women directors and who have sought extension. There is a shortage of suitable women candidates," Mamta Binani, vice-president of the Institute of Company Secretaries of India told dna.

"You can't raise gender balance in the corporate world just by forcibly putting a woman director on the board. A pool of women with leadership abilities has to be created in the middle management from which women directors can be picked up. Unless that happens, the crisis will persist as companies are still wary of appointing an outsider as a director unless he or she is an wellknown personality," Binani, who has been working on gender sensitivity in corporate world, said admitting that the database formed doesn't have many names. The site, independentdirectors.in was developed by ICSI along with institutes representing chartered accounts and cost accountants.

"For any non-compliance beyond September 30, 2015, listed entities would have to pay Rs 1.42 lakh plus Rs 5,000 per day till the date of compliance," said Sutanu Sinha, chief executive officer of ICSI.

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