Mandatory woman director: step in the right direction
— By | Mar 27, 2015 12:05 am
Pouruchisti Meherhomji, Company Secretary, Rallis India Limited, applauds the new Companies Act as well as SEBI for making it mandatory for companies to have at least one woman director on board. The move, will lead to a rise in the number of women in leadership positions in the corporate world, she tells Dipta Joshi
Pouruchisti Meherhomji, Company Secretary, Rallis India Limited, believes in innovating within the existing framework. The thrill of doing something new keeps her excited about her work. In the two decades that she has been associated with Rallis, her team has put in place several governance systems, including an Induction process for new Board members and performance evaluation systems. Many of these, like the Induction Manual for new Directors was introduced much before the Securities and Exchange Board of India, (SEBI) revised Clause 49 of the listing agreement to make the ‘Familiarisation programme’ for Independent Directors mandatory. Similarly, the Board evaluation process was also in place before it became mandatory under the new Companies Act and the revised Clause 49.
“Typically, Independent Directors meet their colleagues and start work immediately on joining a Board, but our Induction Manual ensures he is made aware of the company’s expectations. For instance, how many committees is he expected to serve on etc.,” explains Meherhomji.
Meherhomji’s interest in Business Law saw her pursue Law and the Company Secretarial (CS) course at a time when Chartered Accountancy was the most popular choice. At Rallis, despite holding the CS profile, she still dabbles in law whenever she has been called upon to handle the legal functions as well. She has also had the opportunity to handle a preferential issue, bonus issue and a stock split. “The bonus issue was particularly satisfying, as there is a SEBI prescribed time limit of completing it within 60 days of announcement and the challenge was to ensure that the entire process was completed and listing and trading approvals obtained within that period,” she remembers.
Meherhomji’s work has been a continuous process of learning and growing in the profession. And the fact, that she has been attached to a company which belongs to the Tata Group has only helped. “While we do attend seminars etc., to update ourselves on the latest happening in the field, we interact a lot within the Tata Group too. The CS community is close knit and it is possible to pick the phone and just talk to our peers when needed,” says she.
One reason why the CS community has had to keep learning is the constant change in regulations over the years. Meherhomji remembers several occasions when versions of a new Companies Act were circulated and discussed but not enacted. “There were several versions that I studied in details. In 1993, the year I joined the profession, we expected the new Act to come into force and the 1956 Act to be phased out, but the new Act was finally enacted in 2013,” she says, amusement reflecting in her voice.
Meherhomji believes the new Companies Act, 2013, is full of good intentions since it emphasizes on governance, tries to do away with unnecessary approvals and tries to cover possible regulatory loopholes that led to the recent corporate scams. She also hopes the Ministry of Corporate Affairs (MCA) will continue to clarify and bring about amendments in rules, where the provisions are either too harsh or where clarity is needed in their implementation.
Listing a few of the positives Meherhomji says, “By bringing in provisions relating to independent Directors, regulation of related party transactions and greater participation of minority shareholders in the decision making process, the Act has tried to improve the governance processes in companies.
The provision relating to spending on Corporate Social Responsibility (CSR) will encourage companies to fulfill their social responsibilities and improve the lives of the communities in the areas in which they operate.”
However, Meherhomji feels one of the most striking piece of legislature in the new Act is the stipulation requiring companies (that fulfill certain criteria) to have at least one woman director on board. The move, will lead to a rise in the number of women in leadership positions in the corporate world. Meherhomji applauds both the new Act as well as SEBI which made the same requirement mandatory under the revised equity listing agreement last year. “While some companies may face difficulty in finding the right candidates who meet all the required criteria suitable for the company, the move is definitely a step in the right direction,” says she.
As corporate governance gains traction, the onus of ensuring high ethical standards lies on Company Secretaries. “Besides ensuring compliance of laws and advising the Board and the management on the critical issues, being part of a process that creates value for stakeholders in the company is also immensely satisfying,” observes Meherhomji.
With the new Act having opened up large areas for aspiring Company Secretaries and those who want to get into Practice too, Meherhomji believes the future is bright for the profession. For youngsters looking to enter this profession, she stresses on ethical behavior, sincerity and diligence in the performance of one’s duties. She concludes saying, “It is necessary to remember that the Board and the management rely on the Company Secretary for sound professional advice. Apart from building up knowledge and expertise in the field, it is necessary to exercise a high degree of integrity and professionalism to inspire confidence in the Board, management and the investor community.”
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