This will bring in their own perspective to enable the Boards to be more effective in decision making. Women Directors can be appointed as Executive, Non-Executive or Independent Directors on Boards, said Malhotra.
She further said, “The provision for Women Directors to be appointed on boards is very important for gender diversity and gives that initial encouragement to women to join Boards. They are more collaborative, resilient, empathetic and bring in their own perspective. It’s proven that board diversity always leads to more broad based & effective board performance, avoid similarity of attitude and brings a wider perspective while making decisions.
“Nomination Committee should be responsible for ensuring that qualified persons from divergent backgrounds and gender who can contribute effectively are nominated for maintaining board diversity”, said Malhotra.
The focus of the new Act is on stronger governance, transparency and accountability and the important aspect of governance and management is a strong and competent Board of Directors. There is an extremely enhanced role for Directors in the new Companies Act. Independent Directors have been defined and express provisions pertaining to the requirement to have Independent Directors has been brought in the new Act.
An Independent Director can be selected from a data bank containing names, address, qualifications etc of persons who are willing to act as ID’s and can be maintained by any body, institute or association but will have to be notified by the Central Govt. and will then be placed on the website of the MCA or any other website as notified by the Govt.
These new provisions will require corporates to start identifying Independent Directors & Women Directors to join their Boards within a given time frame. Since, there is a big gap between the new requirement under the provisions and number of Independent Directors available, it presents a huge opportunity for those aspiring to become Directors on Boards.
Companies Act, 2013 prescribes that every listed Company and every other public company having a paid up share capital of Rs. 100 Crore or more or turnover of Rs. 300 Crore or more shall appoint at least one woman director.
Every Company existing on or before the date of commencement of the Act shall within one year from such commencement comply with the requirements of appointing a Women Director and the Transition Period as per draft rules under Companies Act, 2013 requires that every listed company shall appoint a Women Director within one year from the commencement of the section or every other public company – within three years from the commencement of the Section will be required to appoint a Women Director, adds Assocham.