NEW DELHI: As Indian companies scramble to meet a deadline to appoint women to their boards, some wealthy business owners have a solution that meets the letter if not the intention of the law: appointing their wives.
India's market regulator, the Securities and Exchange Board of India, has set a final deadline of April 1 for all of the country's listed companies to name at least one female director. In the 12 months after the SEBI order was first announced in February 2014, only 580 companies out of thousands had appointed women, according to local reports. More than 80 appointments were family of company owners.
India's wealthiest are setting a high profile example of applying the letter of the law. Mukesh Ambani, the second richest Indian who heads the petrochemicals to telecoms conglomerate Reliance Industries Ltd., appointed his wife Nita Ambani to the company's board.
Industrialist Gautam Singhania named his wife Nawaz Singhania as a non-executive director of his company, Raymond Group, one of the world's largest textile manufacturing conglomerates. Both women have business experience though not directly applicable to overseeing a conglomerate.
Globally, women lag far behind men in making their way to top management positions and corporate boards. But the situation is dire in Asia where among the leading economies China tops the list with women making up 8 percent of corporate board directors. Japan with 2 percent and South Korea with 1 percent are at the bottom of the heap. In India, women are 5 percent of directors.
"You can have as many laws put in place, but unless the promoter or the management of the company wants to bring about a change and better governance, there are always ways to comply in letter, but not in spirit," said Pranav Haldea, managing director of Prime Database, a firm that tracks listed companies.
There are about 9,000 listed companies in India. The Bombay Stock Exchange, which is the biggest Indian bourse, has about 4,200 active member companies. The rest are divided between the NSE and a clutch of smaller regional stock markets.
Experts say while the intention of appointing women was to bring about diversity in the boardroom, naming kin to the board might not add to healthy debate and decision-making since someone close to a powerful figure in the company would be unwilling to challenge them.
Others feel appointing family members should not necessarily be viewed as negative.
"There is no reason that companies should not appoint women from the family to be on the board as long as they have the necessary qualifications," said Shachi Irde, executive director of Catalyst India WRC, which works to expand opportunities for women in the workplace.
The market regulator initially gave companies eight months to comply with its requirement for greater female representation on boards. The deadline was later extended to April after companies asked for more time.
But last week, the regulator issued a stern warning that the April deadline was not going to be extended and erring companies would face strict regulatory action by SEBI and stock exchanges.
"The consequences will be according to the law and can be very serious," SEBI chief Upendra Kumar Sinha warned, although he did not specify what the penalties would be.
Sinha said he found it "very shameful" that in India about "9,000 listed companies can't find even one woman who is competent enough to be on their board."
In Parliament, junior minister for finance Jayant Sinha assured lawmakers last week that the SEBI would take "necessary action" once the compliance of companies became known at the end of March.
This week, companies were rushing to name women to their boards. Around 60 companies, including some major Indian conglomerates, announced the appointment of women directors.
Tata International appointed investment banker Vedika Bhandarkar as a non-executive independent director on Tuesday. Bajaj Auto named business historian Gita Piramal to its board this week. Last week, Tata's IT services arm, Tata Consultancy Services, appointed Aarthi Subramanian as an executive director for a three year term. She was already a senior executive at TCS.
On Thursday, Network-18, the Ambani-led media company that owns television channels CNN-IBN and CNBC in India, appointed Nirupama Rao, a former foreign secretary and ambassador to the U.S., as an independent director on the board.
Women with years of experience in areas such as finance and banking find themselves serving on the boards of multiple companies.
Renu Sud Karnad, the managing director of housing finance company HDFC Ltd. is on the board of more than half a dozen major companies.
With days left to the deadline, there were still about 350 companies on the 1,480-member National Stock Exchange yet to comply with the SEBI requirement. Several state-run companies also have not complied.
"There is no dearth of talent," said Haldea.
"There is a valid point that they don't have board experience, but ultimately you have to make a start somewhere," he said. "That is the ball that has to be set rolling."