Any company with five or more independent directors will need to have at least one female director, said Mr Murli Deora, Minister of Corporate Affairs, making the announcement on International Women's Day here.
The rule will be mandated through the inclusion of a new provision in the Companies Bill 2009, expected to be tabled in Parliament during the ongoing Budget session.
“The proposed provision in the Companies Bill will give rightful due to our women in the corporate world. While the UPA Government is making all efforts to reserve one third of the seats in the Parliament/Legislative Assembly for women, this step is in that direction to achieve the cherished objective of women's participation in decision making and giving them the rightful place in the society.”
According to recent studies, it is evident that women are yet to break the glass ceiling in the corporate world, he said. More than 70 per cent of the company boards in India do not have female independent directors.
While the financial services sector has several women at the high post of a Chief Executive Officer, other sectors including manufacturing lag behind.
According to a Standard Chartered study conducted by Cranfield School of Management last year, out of the 1,112 directorships in BSE-100 companies, women account for only 5.3 per cent directorships. Only 48 women hold 59 directorships, which means, some women are members of the boards of more than one company. Only 46 companies have women on their boards.
Only 12 companies on the BSE-100 have more than one female director, seven companies have female executive directors and 2.5 per cent of all executive director roles are held by women, according to the study.