Waking up at the last moment, more 250 companies, incuding Adani Power, Adani Ports, Essar Oil and GVK Power, on Tuesday appointed women directors to meet tge Securities and Exchange Board of India's deadline for midnight tonight for having at least one female member on their boards.
The companies have however mostly appointed wives or daughters of the promoters or top executives, while some companies have replaced their independent directors with their female family members, mainly wives, daughters or sisters.
The numbers can rise further as board meetings were scheduled till late in the night to comply with the norms, which were first announced in February 2014, with an initialdeadline of October 1, 2014. It was extended by six months.
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On Monday too, Nearly 200 companies had made such appointments as part of the last minute rush that began late last week after a stern warning from the regulator.
From Wednesday onwards, the companies without a woman director may face penal action under the SEBI regulations as also under the Companies Act, including monetary fines. While SEBI norms provide for the penalty of up to Rs 25 crore, the penalty under the Companies Act can be from Rs 5000 to Rs. 5 lakh.
Sources said the stock exchanges were asked by SEBI to submit a compliance status tonight, while a final update would be provided after Wednesday after taking into account late-night filings. Subsequently SEBI will look into final compliance status and begin the process for undertaking necessary action against the non-compliant companies.
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Similar action would be initiated under the Corporat Affairs Ministry for non-compliance to the Companies Act provisions.
The companies are required to appoint women directors as per the new Corporate Governance regime ushered in by SEBI last year, which also included various measures with regard to independent directors and top management salaries to safeguard the interests of the small investors. Earlier the new regime was applicable to all the listed firms. SEBI later exempted small companies - those having equity share capital of upto Rs. 10 crore and net worth not exceeding Rs. 25 crore, as also those listed on SME platforms of the stock exchanges - from the mandatory compliance "for the time being."
There are more than 5,000 companies listed on the BSE, while NSE has nearly 1,650 entities on its platform.
Till early evening, nearly 200 NSE—listed companies were yet to comply, while the number could be higher at the BSE.
However, nearly half the appointments made by the companies were of the persons from within the families of the promoters or top executives.
The companies that have decided to appoint women directors as independent members of their boards seem to have preferred bankers and chartered accountants, shows an analysis of the announcements made by listed firms in last few days.
A few companies, such as United Breweries Holdings Ltd, have opted for a foreign national to be appointed as a woman director, while many of them have decided to promote a senior management personnel to the board.
Some companies have, however, expressed their inability to meet the deadline, while citing reasons ranging from a sudden exit of existing women directors to ‘lack of quorum’ in their board meetings to make an appointment.