The capital markets regulator has asked all listed companies to mandatorily appoint at least one woman director on their boards by the end of this month, failing which they would face regulatory action.
Asserting that the consequences will be very serious, Sebi Chairman U K Sinha today said, "I find it very shameful that in this country, about 8,000 or 9,000 listed companies can't find even one woman who is competent enough to be on their board. This is a very shameful thing."
He also rejected suggestions that the companies would be allowed to go scot-free even if they do not comply with the new norms, which were announced in February 2014.
Sebi later gave a six-month extension to its initial deadline of October 1, 2014, and asked all listed companies to have at least one woman member on their respective boards before April 1.
Speaking to reporters, Sinha said, "Who is saying that there is no penalty? Every regulation made by Sebi has a force of law. Let me remind you, in 2013 when we were insisting of 25 per cent minimum public shareholding, some of my friends in media thought this is just a wish-list of Sebi and not enforceable.
"Its absolutely wrong. You can look at statistics. How many companies have we acted against, where we've posed penalties. Any requirement, including the requirement of a woman director, is something which has to be enforced.
"And I'm very categorical, if people do not follow it willingly, then it will have consequences. And the consequences will be as per law and can be very serious."
The regulator, which has found that nearly one-third of the top-500 listed companies do not have any woman member on their respective boards, recently asked the stock exchanges to ensure strict adherence to the timeline.
With less than a fortnight left to meet the deadline, Sebi has also pro-actively written to more than 160 such companies to ensure compliance. Sources earlier said that some of the companies have already replied to Sebi, stating that they were taking necessary steps to meet the timeline.
Besides, Sebi has also written to the Corporate Affairs Ministry, requesting it to inform the registered companies of ensuring compliance to the requirement for all listed companies to have at least one woman director before April 1.
The Institute of Company Secretaries of India (ICSI) has also been asked to tell its members to ensure compliance, as the company secretaries generally serve as 'compliance officers' in the companies for adhering to listing norms.
Having already given an extension, Sebi is very serious on compliance to these norms and the companies would have to face the music by stock exchanges and the regulator if they fail to meet the deadline.
Sebi had adopted a similar multi-pronged approach, including direct engagement with non-compliant companies, when it had put in place the new minimum public shareholding norms for listed firms.
After Sebi's direction in February last year, many companies had stepped up their efforts to have women directors on their boards and nearly 500 female members were nominated to the boards till December 2014, although many of them happen to be family members of the promoters.
Still, a large number of companies are yet to comply. Sebi gave the extension last year to align its corporate government norms with the related Companies Act provisions.
The norms were finalised after detailed discussions were held between Sebi and concerned stakeholders for over a year and involve stronger regulations for listed companies than those prescribed under the Companies Act for non-listed entities.
These include clarification on rules relating to appointment and qualification of directors and independent directors, matters relating to related party transactions, and the rules governing meetings of board and its powers.
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