Women on Nifty500 company boards rise from 6% in 2014 to 17.6%, but the pace is faltering

• Gender diversity on the boards of Indian companies has improved, but India lags behind the global average of 24% women representation in boardrooms.
  
• However, the pace of growth has faltered in the last three years, slowing down to an aggregate increase of just 1%.
  
• Out of the total 4,694 directorships in the Nifty500 companies, only 827 posts were held by women at the end of FY22.
  

Gender diversity on the boards of Indian companies has improved, with women representation on the boards of Nifty500 companies rising almost threefold from 6% in 2014 to 17.6% at the end of FY22, according to a new report by Institutional Investor Advisory Services (IiAS).

However, the pace of growth has faltered in the last three years, showing an aggregate increase of just 1%, the report added.

Out of the 4,694 directorships in the Nifty500 companies, only 827 posts were held by women, accounting for 17.6% of the total.

The Companies Act 2013 mandated companies to have at least one woman director on the board starting April 2014. Prior to this, women representation on the boards of these Nifty500 companies stood between 5-6%. This doubled to 11% in the first year, according to the report.

While the growth was steady over the next few years, the pace declined in 2019 – Nifty500 companies increased women representation by just 1% in the three years since then.

According to the Companies Act, 2013, every listed or private company or every other public company with a paid-up share capital of at least ₹100 crore or turnover of at least ₹300 crore shall appoint at least one woman director.

Further, for listed entities, the SEBI (Listing Obligations and Disclosure Requirements), 2015 mandates the appointment of at least one woman director on the board.

Board refresh: Grandfathering of director tenures ends

It’s not just the pace of growth in women directorships that has slowed down, according to the study. India also lags behind the global average of 24% women representation in boardrooms.

At its current pace, India will take till 2058 to achieve 30% gender diversity on the boards of companies, the report added.

However, there’s some cause for optimism ahead, the report notes: “The approaching 2024 board refresh marking the end of the grandfathering of Independent Directors’ previous tenure, provides a unique opportunity to reset the pace of change.”

Grandfathering is when an old rule continues to apply to some existing situations, in this case to the previous tenures of independent directors.

Out of the 500 companies on the Nifty500, 159 companies had 20% or more representation of women on their boards. Further, 48.6% of the Nifty500 companies had at least two women directors on their boards, the report says.

The situation in public sector undertakings is dire, though, with women representation on their boards at just 13.54%.


Source: NSE, Prime Database, IiAS Research, as of March, 2022

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