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Inclusion Of One Woman Director: Will It Prove To Be Enough?

Updated: Mar 7

Vaishnav Arun Kumar, Assistant Student Editor, Nyayshastram.

Introduction

Prior to the amendment made to the companies act 2013, there had been no provision that had ensured a woman had been inducted as a director to a company’s board and considering the prejudice that exists till day towards women, this change had been a step towards equality. The companies that come under the criteria given in section 149 must appoint a woman director. It includes companies that are listed, having PUSC of 100 crore rupees or having a turnover of 300 crores. The companies that have been incorporated under the Companies Act 1956 and once the company is incorporated, the company must appoint a woman director after 6 months or earlier. [1] There is no necessary qualification required for such an appointment. Due to such amendment, once a woman has introduced as a director, she must along with the other directors obey the articles of association. She must conduct her activities with reasonable care and must not gain an unfair advantage and can be held liable once found guilty. She must have a DIN (Director Identification Number) but how is it allotted? The DIR 3 form must be filled which is given under rule 8 of the companies appointment and qualification of directors rules 2014. [2] Although this has been a step towards ending the war on gender discrimination, India lacks in gender equality when it comes to a structure present in a corporate board. The mere inclusion of one woman will not bring about a change if the existing patriarchal corporate structure shuns her away and sets her plans aside. There are several issues that women face within the company and to prove this, we compare the data gathered in India with Europe and America.


Gender Representation in Corporates in India, Europe and America

INDIA:

According to the data gathered by Egor Zehnder which is a leadership advisory firm, post amendment to the companies act, 96% of the companies in India have at least one woman director as the law mandates companies to do so. However, there is only a mere 17% of women representation in the corporate board structure from the statistics gathered till the year 2020 but there has been an increase in such numbers as it has increased by 8.6% from the past 8 years. [3] As much as there has been a rise in numbers, it proves that it has not been enough to uplift women within the corporate field.


EUROPE:

The data is based on GMI ratings provided by a survey conducted regarding the gender

representation among corporate boards in 6000 companies in 45 countries. The data had shown how forward Europe was in the progress of gender representation. The continent shows a clear increase in such representation. [4] The government of Norway had passed a bill that mandates companies to have at least 40% of females within the board structure. Similarly, several countries within the continent have the same percentage as Norway. However, countries such as Spain and Iceland only mandates 40% in public companies. Countries such as Finland mandates the same for private companies. [5] In Belgium, a law was passed that mandates companies to have a minimum of 33% and if the companies do not act in accordance, salaries of the board members can be suspended. This is similar to the scenario in Italy as the law mandates public companies to maintain 33% but it is not directed only for women. The law applies to any gender that is not represented in a fair manner. India only mandates companies to include one woman director but having a law that requires companies to have a certain percentage can equalise the gender

representation within the board structure.


AMERICA:

According to the report published regarding the state of women in the workplace in America, the men in the corporate sector hold around 62% of the managerial positions which only leaves around 38% for women. One of the most surprising statistics is that to match the rate at which men get promoted to manager, a million women can be added to the managerial sector in the coming 5 years. Only 720 women are promoted to a managerial role with every 1000 men being promoted. 33% of companies have set a bar for gender representation regarding top managerial roles. [6] The state of California has passed the bill (Senate Bill 826) that mandates public companies to have at least one women director within the management structure and the time limit has been extended till the end of 2021. Similar to India, America lacks legislation that backs women within the corporate sector as the numbers prove that gender representation is far from being equalised.


The European countries have shown that the law must mandate companies to have a certain

percentage of women representation within the corporate structure. One women director being included will not balance the situation. India and America must ensure an equal percentage of women directors is present in the corporate sector.


Discrimination of Dalit Women in Corporates

The already existing portion of Dalit women is so minimal in the corporate sector that it is crucial for companies to acknowledge it in this instance. In the private sector domain, no law ensures minorities or even intersectional minorities such as Dalit women are hired by such companies, unlike public companies that aim to protect minorities. According to the data produced by the Centre for Social Equity and Inclusion, post-economic liberalisation in 1991 has increased the number of Dalit women being hired by private companies but the facilities/salaries given to them have not been enough. [7] They have been exploited and paid lesser amounts for the fruits of their labour. According to the data produced by Sukhadeo Thorat and Paul Attewell had given a clear explanation as to why upper-caste applicants are offered more jobs compared to the minorities. Only 60% of Dalits and 30% of Muslims are contacted back for an interview with every 100% upper-caste applicant. The conclusion that they had come to is the fact that Dalits are less likely to be hired compared to the Upper caste applicants. The problem does not end here.


Even if they are hired, Dalit women will find it extremely difficult to climb up the corporate

board structure. [8] There must be amendments made to ensure that private companies hire

minorities and allocate a decent percentage for them.


Pay Gap in the Corporate Sector

Even though there are certain rules prohibiting discrimination towards women that are followed by corporate companies, there is a pay gap present as women are paid lesser compared to the men present in the companies. A survey by recruitment firm Monster India says that the median wage earned by women is 27% lower than what men make. On average, men earn Rs 259.80 per hour whereas their female colleagues earn just Rs 190.50. The online survey had 35,959 respondents across age groups, industries and organisational hierarchies. Nearly 86% of the respondents were males. [9] The Code on Wages 2019 has been drafted to ensure equal remuneration and prohibiting the reasoning of the difference of payment via gender. However, the problem still exists. There must be proper implementation of such law that is drafted which ensures a minimum payment bar is set for companies to follow to equalise the payment scheme.


Women must be ensured that they get the same amount as men for an equal number of hours put in. The noncompliance with such rules must lead to stricter punishments.


Conclusion

The inclusion of one women director provision in section 149 of the Companies Act 2013 has

been a step towards equality in gender representation but it has proven to be not enough. As

shown earlier, several European countries have implemented the percentage system which

ensures a certain number of women are present within the organisation and it has proven to be a larger step towards equalising the gap. In India, the problem of caste discrimination exists too as several Dalits are marginalised and oppressed due to the sole reason of them belonging to a lower caste in the society. The problem of intersectionality is present as Women and Dalits are oppressed within the society. Intersectionality is when two oppressed minorities can be connected such as women who are belonging to a lower caste. A woman belonging to the Dalit community would be oppressed more due to the several disadvantages she faces. Even though the law must cater to women, it must take several minorities into the importance to protect their interests altogether. With the already existing issue of employment opportunities for women, the issue of equal pay is present. Women are not paid the same as men who put in equal hours. There must be provisions that are included in the Code of Wages 2019 for stricter punishments for the companies to act in accordance. In the age of Information and technology, the problem of gender and caste discrimination must be wiped out and must ensure women are given equal opportunities in all fields including the corporate sector.

[1] Companies Act, 2013, s.149.

[2] Companies appointment and qualification of directors rules, 2014, rule 8.

[3] Sonal Khetarpal, Make women on Board count than counting their number, business today, (14th Feb 2020), https://www.businesstoday.in/current/corporate/make-women-on-board-count-than-counting-their-number/story/424279.html.

[4] Women on Boards Survey Finds Legislation Major Driver of Change, NYSE, (15th Feb 2020), https://www.nyse.com/corporate-services/nysegs/hot-topics/corporate-social-responsibility/women-on-boards-survey-legislation.

[5] Women on Boards, UK Department for Business, Innovation & Skills, Women on Boards, (Feb 15th 2020), https://assets.publishing.service.gov.uk/government/uploads/system/upload/attachment_data/file/31480/11-745-women-on-boards.pdf

[6] The State of Women in Corporate America, Lean In, (Feb 16th 2020), https://leanin.org/women-in-the-workplace-2019

[7] Quest for Equity Urban Dalit Women Employees and Entrepreneurs, Centre for Social Equity and Inclusion, (Feb 17th 2020), http://csei.org.in/wp-content/uploads/2017/01/Quest-for-Equity-Urban-Dalit-Women-Employees-Entreprenuers.pdf.

[8] Shish Gupta, Caste: Why it’s still an issue for India Inc, Fortune India, (Feb 16th 2020),

https://www.fortuneindia.com/workplace/caste-why-its-still-an-issue-for-india-inc-/100264

[9] Babar Zaidi, Women employees earn 27% less than men: Monster India salary survey, The Economic Times, (Feb 16th 2020), https://economictimes.indiatimes.com/jobs/women-employees-earn-27-less-than-men-monster-india-salary-survey/articleshow/45956346.cms

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