“When SEBI asked companies to appoint women directors, it was a very small initiative towards board diversity. Despite this, almost a third of listed companies have not met the deadline,” UK Sinha, chief of the capital market regulator, said at an investment conference at the BSE this morning. “Why are corporates afraid to let women participate in running our companies?” he asked.

Speaking later to BusinessLine, Sinha said “very few” companies have even now responded positively to the penalties for non-compliance by appointing a woman director, almost a month past the March 31 deadline. “This is something about which I am not very happy.”

When asked if SEBI will consider more severe penalties than those currently imposed, Sinha said, “Our response is very clear — we have given (companies) some time. If they still don’t comply within a certain time, then the penalty will increase. If they don’t comply within the extended time either, then SEBI will have to consider other actions as well.”

This, Sinha elaborated, includes “All actions and powers that Parliament has given to SEBI. You have seen that when we introduced and implemented the minimum public shareholding requirements of 25 per cent, we went for more severe punishment. I hope that will not arise (here).”

In 2013, when promoters failed to comply with the minimum public shareholding requirement for their companies, SEBI froze the voting rights and corporate benefits (such as dividends, bonus shares) of these promoters. Promoters were also banned from accessing the capital markets and taking on other directorship positions. Other penalties were moving the company’s scrip to the trade-to-trade segment, excluding the scrip from the F&O segment and initiating criminal proceedings against the company.

In the current schedule for non-compliance, SEBI has asked stock exchanges to impose fines on companies that haven’t appointed a woman director. Companies that didn’t meet the March 31 deadline have to pay a fine of Rs 50,000. Companies complying between July 1 will and September 30 will have to pay Rs 50,000 and Rs 1,000 each day till the date of compliance

Companies that fail to comply by October 1 will have to pay Rs 1,42,000 and Rs 5,000 for each day of non-compliance.

But these penalties should not have been necessary, Sinha said. “In some European countries, law requires that a quarter of directors be women. Why can’t Indian companies do this voluntarily?”

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