SEBI’s graded penalty system for companies that fail to comply with the requirement of having at least one woman director on their boards has resulted in their scrambling to fill up positions over the past month. As many as 1,800 women directors have been appointed to company boards which, on the face of it, may seem like a huge victory for gender diversity at the top of the corporate heap. The sad but inescapable truth, however, is that in a large number of companies — including high-profile ones such as Reliance Industries and Jet Airways — spouses and other relatives have been appointed in order to comply with the letter of the law. Such tokenism has made something of a mockery of the spirit of the law and clearly undermined the purpose of the regulation, which is to enable meritorious women ascend to the top of the corporate hierarchy, where they are grossly under-represented.

But rather than merely lament about the manner in which companies have rushed in to comply with SEBI’s regulation, it is appropriate to question the wisdom of taking a reservation-based approach to ensuring gender diversity. In appointing a director, companies have a number of considerations in mind — including such things as trust and expertise. Those in senior management roles are often selected as directors, but the problem that companies face is that there are not that many women in these positions. As SEBI has not mandated that women directors be independent, many of these positions have been filled by mere figureheads — which has exposed a flaw in the regulation that SEBI should have anticipated.

The issue in this connection, of course, goes beyond selecting the right women for the job. Companies — particularly the big ones with multiple subsidiaries — have found it a real challenge to fill SEBI’s quota for independent directors as well. Independent directors, who should be unrelated to promoters and not have substantial shareholdings in the company they govern, were supposed to improve corporate governance through more objective decision-making and by playing a more active role in protecting shareholder interest. But there are many instances of subsidiaries of big companies being forced to make appointments for the sake of complying with the law rather than with any real purpose of fulfilling the objective of the regulation. Once again, SEBI can be blamed for not telling the difference between a faultless objective and a flawed regulation. Women corporate leaders are not going to be made by top-down quotas; rather, they can be created only by fashioning a corporate ecosystem that does not prevent them from rising to senior management positions. HR policies need to be revamped to address some of the core issues that lead to women dropping out. These include better childcare facilities, training in gender sensitivity, and the introduction of flexible work hours, wherever possible. It’s only then we will truly have women on top.