WOMEN DIRECTOR

INTRODUCTION-

Before going through the topic of women director Firstly I would like to start from the basics
that, what is Director? The Board of Directors is the important body elected by the
shareholders of the company and is responsible for running of the company. The board shall
act in good interest of the company. It protects the interest of the various stakeholders of the
company. The Companies Act 2013 enhanced the accountability and responsibility of the
directors by mandating certain disclosures and provision of the Act. One of the mandatory
provisions of the companies Act 2013 is the appointment of the women director on board. As
per New Companies Act 2013 why Focus is on Women Director? So here is the answer for
this question as per research and statistics in America, many of the fortune 500 companies are
having women director on their board have achieved better financial performance than those
who have less women directors on board. In India very minimal percentage of women
director is present on board. So here new Companies Act 2013 is certainly going to help
improving the representation of women on board

DIRECTOR-

The Companies Act, 2013 does not contain an exhaustive definition of the term “director”.
Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board
of a company.

A director is a person appointed to perform the duties and functions of director of a company
in accordance with the provisions of the Companies Act, 2013.

BOARD OF DIRECTORS-

A company, though a legal entity in the eyes of law, is an artificial person, existing only in
contemplation of law. It has no physical existence. It has neither soul nor body of its own. As
such, it cannot act in its own person. It can do so only through some human agency. The
persons who are in charge of the management of the affairs of a company are termed as
directors. They are collectively known as Board of Directors or the Board. The directors are
the brain of a company. They occupy a pivotal position in the structure of the company.
Directors take the decision regarding the management of a company collectively in their
meetings known as Board Meetings or at the meetings of their committees constituted for
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certain specific purposes.

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Section 2 (10) of the Companies Act, 2013 defined that “Board of Directors” or “Board”, in
relation to a company, means the collective body of the directors of the company.

 MINIMUM / MAXIMUM NUMBER OF DIRECTORS IN A COMPANY

Section 149(1) of the Companies Act, 2013 requires that every company shall have a
minimum number of 3 directors in the case of a public company, two directors in the case of
a private company, and one director in the case of a One Person Company. A company can
appoint maximum 15 fifteen directors. A company may appoint more than fifteen directors
after passing a special resolution in general meeting and approval of Central Government is
not required. A period of one year has been provided to enable the companies to comply with
this requirement

WOMEN DIRECTOR-

INTRODUCTION-

Women empowerment is not something where a woman can merely play a simple role in a
corporate but should be a part the higher level of decision making process. As per the
available data, European countries lead in appointing Women as Director on a Company’s
Board. Among them, Norway stands top with 45% whereas India holds only 4.7%. However,
the percentage of women Directors appointed in Indian companies is expected to increase.

WOMAN DIRECTOR SECTION 149(1)-

Every listed company shall appoint at least one woman director within one year from the
commencement of the second proviso to Section 149(1) of the Act.

Every other public company having paid up share capital of Rs. 100 crores or more or
turnover of Rs. 300 crore or more as on the last date of latest audited financial statements,
shall also appoint at least one woman director within 1 years from the commencement of
second proviso to Section 149(1) of the Act.

A period of six months from the date of company’s incorporation, has been provided to
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enable the companies incorporated under Companies Act, 2013 to comply with this
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requirement. It is better to say that existing companies (under the previous companies act) has
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to comply the above requirements within one year and new companies (under the new
companies act) has to comply within 6 months from the date of its incorporation.

Further if there is any intermittent vacancy of a woman director then it shall be filled up by
the board of directors within 3 months from the date of such vacancy or not later than
immediate next board meeting, whichever is later.

(Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 hereinafter

referred in this chapter as Rule)

 CRITERIA-
A company, whether a public company or a private concern, will be required to
mandatorily appoint at least one woman director if it fulfils any of the following
criteria:-
1. It is a listed company whose securities are listed on any stock exchange.

2. It is a company having paid-up capital of Rupees one hundred crore or more,

and a turnover of Rupees three hundred crores or more.

 ROLE OF WOMEN DIRECTOR IN CORPORATE BOARD-

 WHY THERE IS A NEED FOR WOMEN DIRECTOR?

It has been proven that companies with a woman as directors have a greater return on equity
i.e. 4.4% while companies having only men on the board has a rise on ROE of 1.8% on an
average per year. This also applies to the family-run companies as well as the private
companies.

Having woman director can help in many ways such as:-

 better Financial results

 better diligence in decision making and risk management
 gender diversity act as a strategy
 good governance
 the maximization of company performance
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After the Satyam and other scams similar to it, companies should look for a talented woman
who can add value to the company and come up with new, innovative ideas and perspectives
for the companies.

Companies such as Mahindra and Mahindra Ltd and the Essar Group have introduced woman
directors from academic & research institutions so that they can add value to their companies
and work diligently.

A comprehensive study was conducted by the catalyst in the year 2007 and it was concluded
that top ranking companies which had more woman directors on the board were having
higher financial performance and it can also improve the GDP of the country.

According to the reports of Harvard Business Review in 2011 women leaders were judged on
different parameters and it was found that women directors are much better as compared to
male directors because they have the quality to take initiative and perform well as well as
build better relationships.

 WHAT IS THE POSITION IN INDIA?

In India, after this rule was made mandate through section 149(1) of the Companies Act,
2013, Companies such as Reliance Industries, appointed Nita Ambani, wife of chairman
Mukesh Ambani as a director in order to comply with this rule. Vijay Mallya also introduced
his stepmother on the board. Companies such as Apollo Hospitals, Asian paints also have
their family members on their board.

 WHAT ARE THE NEEDS FOR INDEPENDENT WOMAN DIRECTOR ON THE

BOARDS?

The Companies Act and SEBI prescribed and mandated that listed entities in India should
have at least one woman on the board either independent or executive, and this was done as a
representation of woman director on the board.

Uday Kotak committee as setting up by SEBI consisting of 21 members has recommended

that half of the board of listed entity should constitute of independent directors and at least
one should be a woman independent director. 637 companies out of 1,670 companies listed
on the National Stock Exchange (NSE), has to appoint a woman independent director as
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recommended by the Committee. Companies such as Apollo, Asian Paints, Reliance

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industries have appointed a woman member from their families on the board to comply with
the law so, in order to avoid this, the committee came up with the recommendation of woman
independent director on the board.

 DUTIES AND LIABILITIES-

The following duties and liabilities have been imposed on the directors of companies, by the
Companies Act of 2013: —

A director of a company shall act in accordance with the Articles of Association (AOA) of
the company.

A director of the company shall act in good faith, in order to promote the objects of the
company, for the benefits of the company as a whole, and in the best interests of the
stakeholders of the company.

A director of a company shall exercise the duties with due and reasonable care, skill and
diligence and shall exercise independent judgment.

A director of a company shall not involve in a situation in which she may have a direct or
indirect interest that conflicts, or possibly may conflict, with the interest of the company.

A director of a company shall not achieve or attempt to achieve any undue gain or advantage
either to herself or to her relatives, partners, or associates and if such director is found guilty
of making any undue gain, she shall be liable to pay an amount equal to that gain to the
company.

A director of a company shall not assign her office and any assignment so made shall be void.

If a director of the company contravenes the provisions of this section such director shall be
punishable with fine which shall not be less than Rs.1,00,000/- but which may extend to
Rs.5,00,000/-.
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 CONCLUSION & SUGGESTIONS

Women director is not only the need of hour to put a better corporate image in terms of good
governance but are also needed to strengthen the board participation in various activities. Not
having women director on corporate board may simply indicate the presence of glass ceiling
through which women are not allowed to pass to the upper levels of hierarchy in management
structure of the firm. Companies Act 2013 has made a humble attempt in not only
strengthening the role of women on corporate boards but also in society at large. Though at
present as a voluntary action not many companies have women director or rather active &
participating women director on their boards.

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