India's Maiden Board Refresh: A Mere Formality or Testament to Board's Dedication to Diversity?

A substantial number of independent directors on company boards will complete a 10-year mandated tenure by April 1, 2024.

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This will result in more than 1500 vacancies in 825 listed companies and about 30,000 vacancies if we include the unlisted companies. The pertinent question is whether the anticipated Great Board Refresh of 2024 will be a mere formality or a testament to a board’s resolve to swing-in diversity on boards. We are likely to witness some definitive changes in the course of the next one year that may have far reaching implications.

DO WE HAVE ENOUGH WOMEN ON-BOARD?

In recent years, the corporate governance landscape in India has witnessed a significant shift towards fostering gender diversity on boards. The Companies Act (2013), SEBI Regulations (2015), and the appointment of the Uday Kotak Panel on Corporate Governance by SEBI in 2017 have all played pivotal roles in steering this change in India. The Companies Act of 2013 mandated all listed companies and large corporations to appoint at least one female director to their boards. Further to this, SEBI Regulations of 2015 required all listed companies to select at least one woman on their boards before April 1, 2015, whether executive or non-executive.

A recent EY report on DEI states that almost 95% of Nifty 500 companies currently have at least one woman on board, and about 40% of companies have gone beyond the mandate and appointed more women than one on their boards. The average board representation of women in 2013 was 6%, which changed to 13% by 2017 and stands at 18% in 2022.

IS INDIA INC. AT THE RISK OF TREADING THE PATH OF THE OFT-QUOTED TOKENISM?