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Multinational company BASF India has appointed Germany-based Andrea Frenzel as a non-executive director to comply with the law on having women directors on company boards.
On the same day it appointed N J Baliga an alternate director to attend meetings in place of Frenzel.
A provision in Clause 49 of the listing agreement for companies, which came into force on April 1, requires every listed firm to have a woman director.
Proxy advisory firm Stakeholders' Empowerment Services (SES) is of the opinion that appointing a man as an alternate director in place of the sole woman director "cannot be deemed as compliance with the law".
"The company could not find a single Indian as a suitable candidate to be on the board in India. It then finds a woman at a faraway place to be a director. And then finds the director so appointed does not have the time and needs to have an alternate director," a voting recommendation report by SES said.
The proxy firm also criticised the fact that the company settled for one of its own male executive directors, Baliga, as the alternate director.
In response to SES BASF wrote, "Andrea Frenzel was appointed as a director on the board only with effect from January 1, 2015. She has not attended board meetings in 2014-15. The support to the board as well as the company would be more reflected during 2015-16. She will be attending most of the board meetings."
Apart from Baliga, BASF also appointed Rajesh Naik as an alternate director for Rainer Diercks, another senior executive of the Germany-based parent. According to SES, the move runs in conflict of the definition of non-executive director and changes the board composition frequently.
BASF argued that appointment of alternate directors was provided for under the Companies Act and that it did not alter the board composition. Company executives also pointed out that another proxy advisory firm, Institutional Investor Advisory Services, had told shareholders to vote in favour of all nine resolutions in the company's annual general meeting scheduled for August 20.
"BASF India is convinced that all resolutions put forward to our shareholders for voting at this year's annual general meeting are fully compliant with the applicable laws. We are confident that this view will be shared by our shareholders," said Pradeep Chandan, company secretary and legal head of BASF India.
"Corporate governance is a high priority at BASF. We are committed to responsible governance that is geared at increasing the company's value in a sustainable way," he added.
A GENDER LINE THAT'S BLURRED
- Multinational company BASF India has appointed Germany-based Andrea Frenzel as a non-executive director to comply with the law on having women directors on company boards.
- On that day it appointed N J Baliga an alternate director to attend meetings in place of Frenzel.
- A provision in Clause 49 of the listing agreement for companies, which came into force on April 1, requires every listed firm to have a woman director.
- Proxy advisory firm Stakeholders' Empowerment Services says appointing a man as an alternate director in place of the sole woman director "can't be deemed as compliance with the law".
- BASF argues appointment of alternate directors under the Companies Act and it did not alter board composition
- Company executives pointed out that Institutional Investor Advisory Services had told shareholders to vote in favour of all nine resolutions in the company's annual general meeting set for August 20
