(Development of women leadership and ensuring their effective participation in different spheres of the society calls for political commitments, legislative support and pro-women attitude. In this context leadership of women in corporate world deserves special attention. Women around the world are very poorly represented in decision levels of the structured business organizations. Different countries are therefore, pursuing policies to address the problem. The issue requires no mention for countries like Bangladesh.)
Introduction
Bangladesh did remarkably well in achieving her Millennium Development Goals (MDGs). Our strategy focus is now on the sustainable Development Goals (SDGs) adopted by UN General Assembly on September 25, 2015 as successor of the MDGs to have a poverty and hunger free peaceful planet. There are 17 goals and 169 targets set in the UN resolutions to be achieved by the countries by end of 2030. Goal number five of the resolution calls for achieving gender equality and empowerment of all women and girls. Nine targets have been set under this agenda. Target five requires countries to “Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic and public life”.
Development of women leadership and ensuring their effective participation in different spheres of the society calls for political commitments, legislative support and pro-women attitude. In this context leadership of women in corporate world deserves special attention. Women around the world are very poorly represented in decision levels of the structured business organizations. Different countries are therefore, pursuing policies to address the problem.The issue requires no mention for countries like Bangladesh. Women represent around 50% of our population. Almost 35% of our students at tertiary level are female. But in terms of leadership in economic, social or political arena they lag far behind their male counterpart. Development in business or economy like other social sector shall not be sustainable unless we bring this vast segment of our population at the frontage. Under the SDG we are committed for ensuring their full and effective participation and equal opportunities for leadership at all levels. But as the saying goes, “you can’t make unequal equal by treating them equally. You have to act unequal to make them equal”. This is why we need policy intervention to pull up those who are lagging behind. In Bangladesh we are driving strategies to remove impediments to the women entrepreneurship development. Specific policies including easing the access to finance, special incentives for women entrepreneurs’ etc. are in place to help them in their effort for business ventures and integrate them to the economic process. However, our fiscal, regulatory and strategic policies are mostly directed towards economic empowerment women through small and micro entrepreneurship. It is at the same time important that we design policies that ensures women empowerment and decision authorities in the corporate forms of business as well. Policies to bring in gender diversity in the corporate boards is one of the way we can demonstrate our commitment to give equal opportunities to women in the decision making at corporate level.
Legal framework- Bangladesh perspective
In the Anglo-American model of corporate governance, the board of directors is highest level of decision making authority. The formation and functioning of the board including the eligibility of the members is determined by the relevant law which in our case is the companies Act 1994 and for Banking and Non-banking Financial Institutions (NBFIs) the Banking Companies act 1991. Additionally, for the listed companies, there are codes of corporate governance issued by Bangladesh Securities and Exchange commission which provides guidelines as to the size, composition, qualification and disqualifications of the members of the board of directors. None of the statutory provisions currently in force in the country contains any directives as to the issue of gender diversification not to talk of gender equality in the board of corporate bodies. Despite the fact that the listed companies in Bangladesh are predominantly owned and controlled by family, there is little representation of women in the board of the companies. It should be mentioned here that as per banking companies act no directors can continue his office of directorship for a continuous period of maximum six years. As consequent to this, sponsors of such companies in order to maintain their family dominance often transfer the shares in the name of their close relatives like wife or daughters. It might be due to this reason that female members are more visible in the boards of banking companies as compared to other companies.
Under the existing law directors are elected by the shareholders through voting in the annual general meeting. Given the level of development of female entrepreneurship in the country and the fact that the number of female entrepreneurs lag far behind their male counterpart, it is most unlikely that gender diversity in the board of companies can be brought in through the normal process and without policy intervention requiring preferential treatment for the women.
The codes of corporate governance issued by Bangladesh Securities Exchange commission initially in 2006 on comply or explain basis and subsequently making it mandatory in 2012 for the listed companies of Bangladesh require among others, inclusion of Independent Directors (IDs) in the board of the companies. According to the corporate governance code at least 20% of the members of the board should be IDs who holds preferably no shares in the company or if they hold at all, it is less than 1% of the shares outstanding. It also lays down the qualification and disqualification of the IDs. But there is nothing in these codes as to the representation of women. A provision of minimum women quota could have been in line with our commitment to empower women and give them the opportunity for leadership in the decision making process at corporate level. A small survey carried out by this scribe among 32 companies listed with Dhaka stock exchange reveals that out of 57 independent directors appointed in the board complying with BSEC’s code of corporate governance only four are female members. It can be safely concluded without any detailed survey that the percentage of female in the corporate boards of listed companies will be much lower than the same as aforesaid if all directors are taken into account.
Global Scenario
The issue of gender diversity in the board is a much discussed issue even in developed and developing nations. Regulatory authorities of different jurisdiction are trying to inject more female members in the corporate boards. Up to 2010, women represented only 11.9% of the total board members of large scale listed companies in the European Union. From 2003 to 2010 rate of growth of women in the board was only 0.03%. The EU took the issue of equality between men and women as a political agenda and in 2011 they called for self-regulatory measures by companies to increase percentage of female members in the board. After reviewing that the progress is not satisfactory and self-regulatory measure did not work, one year later in 2012, EU commission drafted law requiring companies to improve the gender diversity of the boards. The law requires 40% mandatory quota for women in the board of companies. UK has voluntary quota of 25% for all FTSE companies. The number of female directors in the Malaysian listed companies was 8.3% in 2013 when the Malaysian government initiated a program to improve the gender diversity of the board and set a target to achieve 30% representation by end of 2016. Just one year after initiating the program women members in the boards of Malaysian companies rose to 12.5%.
In India female representation in the board National Stock Exchange (NSE) listed companies in 2010 was 5.5% which almost doubled by 2015 to 11.2%. India introduced a law that requires at least one female director in the board of the companies which were effective from January 2015. The latest statistics shows that 12.8% of all directors of NSE listed 1624 companies are women. In 2016 almost 76% of the NSE 500 companies have at least one women director in the board.
It is evident that policy induced approach is necessary to bring women in the decision making levels of the companies even in the developed nations. In the context of our socio-economic and cultural perspectives, low level of managerial or decision making positions held by the female members in the formal corporate sectors and the barriers faced by them to reach at the decisions making levels, the need for such a policy is more intensely felt to achieve the goal of gender equality and women empowerment. Government is now drafting a new Companies act. The code of corporate governance issued by Bangladesh Securities and Exchange Commission is also in the process of revision. It is therefore, high time for our policy makers to consider the issue of gender diversity in the corporate boards of Bangladesh.
*(The write is the Past President of the Institute of Cost and Management Accountants of Bangladesh (ICMAB). He can be reached at jacmamun@gmail.com)
A Management Accountant's Thoughts 