Women on Board: Breaking Barriers or just a Legal Checkbox?

The Legal Mandate: What does Section 149(1) say?

According to Section 149(1) of Companies Act 2013, a public companies should minimum three directors, two for private companies and one for OPC. A proviso was introduced, that some corporations have to pick at least one female director.

This is in accordance with the 2014 Rules’ Rule 3.

• Every listed business

• Companies paid up capital of ₹100 crore and revenue of ₹300 crore

The purpose was clear: go about the task of making governance more inclusive and extending gender diversity in boardrooms.

The numbers: What has changed since 2013?

Before the institution of Section 149(1), women were almost absent from corporate board rooms, their participation was usually limited to family owned companies or traditional sectors. However, from the first presentation this situation has been slowly changing. According to reports, the figure in the number of female directors in the Indian corporation has gone up from approximately 5–7% in the years preceding the law, to approximately 17 per cent in corporations listed on the NSE by 2022. It’s a big deal that more and more businesses are waking up to how huge the role is for gender diversity in leadership.

Beyond abiding with the legislation, Infosys, Wipro and HDFC, among many other big businesses, have proactively promoted women to top leadership position including on wheels like audit and risk management. These businesses that have attempted to ensure that women are not just appointed to boards, but that they also have responsibility and the ability to contribute to shaping company strategy. It has not been a uniform progress. Smaller businesses and several industries still struggle with true inclusion, despite significant improvements for major public corporations. Yet many businesses still treat women’s employment as a compliance obligation rather than as a strategic step to enhance decision making. The stats have gotten better, but the actual working out of change is ongoing and the disparity persists.

Is it real change or just Tokenism?

If a rise in female directors is encouraging, it has to be taken into account whether this is real progress or yet another symbolic exercise. Organisations who hire women merely fulfill legal requirements, but they do not give the women important jobs or tasks. In fact, women in the boardroom and in important decisions are still symbolic persons who will not have anything to say. Some businesses are taking steps beyond symbolic efforts by assigning women with pertinent experience to some important roles, such as chairing committees or participating actively in strategic choices. In other words, the strategy proves that even true participation brings about improvements to governance and decision-making generally, as well as gender equality.

A real turning point will be when women directors are regarded as an essential part of the business leadership team, rather than a liability to meet the compliance rules.

Success stories: Where inclusion works

While some of the businesses have taken the women director requirement as a chance to bring about significant change, others regard it as a mere formality. Kiran Mazumdar-Shaw, who founded Biocon, the largest biopharma company in India, alongside board seat of important businesses, is an excellent example of someone who contributes both strategic leadership as well as deep technical contribution to these businesses.

Similar to this has been Naina Lal Kidwai, the former head of country division in HSBC India whose strong views about corporate governance have encompassed serving as director of Nestlé India and Altico Capital. Today these women are not only seated at the boardrooms, but they are leading debates, influencing laws and setting the standards for what is considered a winning female leadership.

However, forward thinking companies such as Infosys, HDFC Bank and Tata Steel, have a step ahead of them and have made sure that their female directors are present on important committees that take crucial decisions, including audit and risk management. This proves that the deliberate inclusion is a thing that results in diversified thinking, something better in governance and eventually a long term value creation.

The way forward

In other words, they have to go further than formal compliance if Section 149(1) is really to work.

• Hire new competent women rather than simply famous women in order to increase diversity in the talent pool.

• Provide funding to leadership development and training initiatives for women to mentor upcoming leaders.

• Instead of symbolic positions, they should put woman in the real decision making positions.

• Put diversity scorecards in place and carry out frequent assessments.

• Shift your point of view from seeing inclusion as a tick, towards thinking of it as a strength.

Conclusion

Section 149(1) was a daring legal move towards gender inclusiveness in the corporate India. Although many women have gained new opportunities through it, real development demands real engagement, not just statistics. So a seat at the table must go hand in hand with the voice that is respected and heard. This provision will truly succeed when businesses feel that having diverse leaders helps lead to better decisions, as opposed to when compliance out of duty becomes a priority. It should be rule to include rather than exception.

References

1. The Companies Act, 2013, No. 18, Acts of Parliament, 2013, § 149(1).

2. Companies (Appointment and Qualification of Directors) Rules, 2014, Ministry of Corporate Affairs, Rule 3, available at: https://www.mca.gov.in/Ministry/pdf/CompaniesAppointmentQualificationDirectorsRule s_14032014.pdf (last visited Apr. 20, 2025).

3. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Securities and Exchange Board of India, available at: https://www.sebi.gov.in (last visited Apr. 20, 2025).

4. Ministry of Corporate Affairs, Nearly 11.6 Lakh Women Directors Associated with Public and Private Companies, Press Information Bureau, Dec. 17, 2024, available at:

https://pib.gov.in/PressReleasePage.aspx?PRID=2085198 (last visited Apr. 20, 2025).

5. Institutional Investor Advisory Services (IiAS), Corporate India: Women on Boards, Nov.

2022, available at:

https://www.primeinfobase.com/indianboards/files/IIAS_Report_on_Corporate_India_W omen_on_Boards_Nov_2022.pdf (last visited Apr. 20, 2025).

6. N. Gupta & A. K. Jaiswal, What Happened When India Mandated Gender Diversity on Boards, Harvard Business Review, Feb. 5, 2021, available at: https://hbr.org/2021/02/what-happened-when-india-mandated-gender-diversity-on-boards (last visited Apr. 20, 2025).

7. KPMG India, Our Impact Plan FY2023, June 2024, available at: https://assets.kpmg.com/content/dam/kpmgsites/in/pdf/2024/06/KPMG-in-India-OurImpact-Plan-2024.pdf (last visited Apr. 20, 2025).

8. Deloitte, Women in the Boardroom: A Global Perspective, 8th ed., 2023, available at: https://www2.deloitte.com/in/en/pages/about-deloitte/articles/Women-in-boardroom-Aglobal-perspective.html (last visited Apr. 20, 2025).

9. MSCI, Women on Boards: Progress Report 2022, Oct. 2022, available at:

https://www.msci.com/documents/10199/36771346/Women_on_Boards_Progress_Repor t_2022.pdf (last visited Apr. 20, 2025).

10. Ideas for India, Why Firms Should Appoint 'Networked' Women Directors, Sept. 2024, available at: https://www.ideasforindia.in/topics/social-identity/why-firms-shouldappoint-networked-women-directors.html (last visited Apr. 20, 2025).