Women directors: Sebi readies for action against errant firms

A large number of listed companies, including some state-run firms, may face regulatory action by the Securities and Exchange Board of India (Sebi) and stock exchanges after failing to appoint at least one woman director on their respective boards.

While the final tally of the non-compliant companies is being tabulated, the authorities have also come across discrepancies in cases where listed firms managed to announce the name of women directors before April 1, sources said.

In some cases, the Director Identification Number (DIN) has been found to be missing for the appointed women directors, while there are also instances of due process not being followed in calling a board meeting for such appointments.

The Ministry of Corporate Affairs may also take action against non-compliant entities, as the Companies Act also provides for having at least one woman director on boards of listed companies.

The action could involve monetary penalties too. While Sebi norms provide for penalty of up to Rs 25 crore, the penalty under the Companies Act can be from Rs 5,000 to Rs 5 lakh.

According to initial estimates, nearly 200 companies listed on the National Stock Exchange (NSE) failed to meet the deadline, while the numbers are much higher for the Bombay Stock Exchange (BSE).

Capital market regulator Sebi is yet to take a call on the companies that failed to announce the name of women directors within the deadline, but later announced such appointments while stating that they were made before April 1.

Some companies had also written to Sebi and the exchanges about their 'inability' to meet the deadline, while citing reasons like 'lack of quorum' at their board meetings and sudden exit of their existing women directors.

Nearly 500 companies announced such appointments in the last two days - March 30 and March 31 - while over 100 firms made such announcements on April 1. Besides, close to 50 companies have announced the appointments after April 1, although they have stated that the women directors were appointed with effect from March 31 or before.

The biggest concern for the market regulator is the fact that some large state-run companies lagged behind in having at least one female member on their boards.

All listed companies were required to have at least one woman director on their boards April 1 onwards, as per a new Sebi directive, as also under the Companies Act, 2013.

The firms have been warned of "serious consequences", including hefty penalties for non-compliance. Sources said Sebi has sought a compliance status report from the stock exchanges and would take a call accordingly.

An extended weekend soon after the expiry of deadline - due to holidays on Thursday and Friday - came as a respite to the non-compliant companies but the regulator and the exchanges may begin penal action tomorrow onwards, they added.