Mumbai: Stepping up its pressure, regulator Sebi 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.
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, has also asked the stock exchanges to ensure strict adherence to the timeline.
With just a fortnight left to meet the deadline, Sebi has also proactively written to more than 160 such companies to ensure compliance.
Sources 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.
Under new corporate governance norms, announced early last year, Sebi had initially asked all listed companies to have at least one woman director on their boards by October 1, 2014. However, the deadline was later extended to April 1, 2015.
Having already given a six-month extension from the earlier deadline, Sebi is very serious on the compliance to these norms and the companies would have to face the music by the stock exchanges and the regulator if they fail to meet the deadline, sources said.
Sebi had adopted a similar multi-pronged approach, including the direct engagement with the non-compliant companies, when it had put in place the new minimum public shareholding norms for the listed firms.
In the woman director matter, Sebi earlier this year had sought details from the stock exchanges about the compliance in the top-500 companies.
After it found that over 160 of those did not have any woman director, the regulator initiated a detailed framework to ensure compliance within the given timeline.
The exchanges have been now asked to ensure adherence to the timeline by all listed companies and to initiate action against those failing to appoint at least one woman on their respective boards by the end of this month.
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 have the extension last year to align its corporate government norms with the related Companies Act provisions.
The norms were finalised after detailed discussions 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.
Without disclosing the names of the concerned brokers, the NSE had said in its circular that some of them were not adhering to the requirement of settling client accounts once a month or a quarter, as desired by the investor.
"It is also observed that the funds available with the member were reported to be short of the amount payable to the clients as per the settlement cycle, which indicates serious liquidity concerns," the exchange had said, while warning the brokers of serious action for lapses on their part.
"In the recent past, the exchange has also received large number of investor complaints for non-receipt of funds and securities against some members," it added.
As per Sebi guidelines for settlement of client accounts, the exchange regulations require "clear segregation between client funds/securities with that of the member and the permissible purposes for which the funds and securities can be transferred from client accounts.
The brokers are also required to settle the client accounts once a month or a quarter, as per the consent obtained from the client.
"Members may appreciate that the facility of running account is provided for operational convenience and should be used responsibly and judiciously.
"However, it is observed during exchange-conducted inspections and the half-yearly internal audits conducted by member-appointed internal auditors that some members are not diligently adhering to the requirement of settling client accounts once a month or quarter as per the consent of client," the NSE circular said.
The exchange has asked its members to ensure that the funds and securities available in the client accounts, together with balances available with the clearing member and funds with clearing corporation, are not less than the funds and securities payable to the client at all times.
"Members are also advised to reconcile client beneficiary accounts and the register of securities on a quarterly basis and maintain complete audit trail and documentation of such reconciliation.
"Any discrepancy between amounts/securities payable to clients and the actual balances available in client's bank and beneficiary accounts together with the balances available with clearing member/clearing corporation and any instance of actual settlement not done shall be viewed very seriously," the NSE said.
The exchange has directed all members to ensure compliance to this circular.
