The boardroom glass ceiling: Competence over compliance for women directors

Illustration: TBS

A recent article published in The Business Standard titled "BSEC extends female independent director appointment deadline" on 6 August 2025 has brought to light a broader and growing issue in corporate governance in Bangladesh. The Bangladesh Securities and Exchange Commission (BSEC) has extended the deadline for listed companies to appoint at least one female independent director to their boards, a well-meaning regulation aimed at promoting gender diversity in leadership.

However, the underlying reason for this extension is deeply concerning: many companies are unable to find qualified and competent female candidates to fill these roles. The article also rightly points out that even companies requiring only one independent director (based on their board size) now need to appoint a second one to meet the gender requirement unintentionally disrupting board dynamics and effectiveness, especially when qualified candidates are scarce.

While well-intended, this mandate has exposed the scarcity of capable, experienced professionals, not just among women, but across the board. It is not a gender problem; it underscores a broader problem of governance capacity and the absence of a robust talent pipeline for board-ready professionals.

Roles of independent directors

Independent directors (IDs) are meant to act as objective voices, safeguarding the interests of all shareholders, especially minority ones. Their responsibilities include overseeing management decisions, ensuring transparency, reviewing financial and risk-related matters, and upholding ethical standards.

But independence on paper is not enough. Without the competence, confidence, and clarity needed to perform these roles, the presence of an independent director becomes symbolic rather than substantive. Besides, the IDs are expected to chair the subcommittees of the board, be in the audit committee or NRC committee and in case of banks, the executive committee, and risk management committees. To be effective in these roles, board members must be prepared; not just appointed.

In some multinational corporations (MNCs), where I have had the humble opportunity to serve as board member, the recruitment of independent directors is typically done through global executive search firms to ensure objectivity and independence in the recruitment. These firms screen candidates based on skills, diversity, strategic mindset, and ethical standing.

Unfortunately, in many local companies and banks in Bangladesh, board appointments remain driven by networks rather than merit. This practice undermines both the spirit and the substance of good governance. Again, in MNC boards, independent directors come prepared, are subject to global training standards, and actively participate in strategic and risk-related discussions. The board is treated as a strategic asset, not a ceremonial body.

In contrast, local boards, in many cases, still operate in a reactive and compliance-driven way. The real purpose of governance – oversight, accountability, and long-term sustainability – often gets lost. The presence of an independent director is not enough. What we need is a culture of governance that treats board appointments as a strategic decision, not just a legal requirement.

The gender mandate

The BSEC's regulation requiring at least one female independent director per listed company is a progressive and necessary step. Women remain grossly underrepresented in leadership roles, and board diversity has been proven globally to improve decision-making and reduce risk.

However, the extension of the appointment deadline shows that the ecosystem in Bangladesh has not been adequately prepared to support this regulation. Companies are not resisting the idea—they simply can't find enough qualified women who are ready to step into these demanding roles.

Developing competent female directors

If we want to see more capable women in boardrooms, we must move beyond mandates to real capacity-building. This means investing in a structured approach to develop, support, and retain female leadership for the long term.

Training and certification programs

We need a national-level or company-level training program for all current and aspiring independent directors, with a special focus on women professionals. This should cover corporate governance codes and their implications, legal and regulatory responsibilities, financial literacy and reporting, and risk management and boardroom dynamics.

In India, certification is mandatory for directors serving on listed company boards. While my personal opinion is not to make it too rigid to discourage women to step into the role, at the same time, training, knowledge and readiness will provide confidence to both the ID and the companies when appointing female directors.

Build a verified talent pool and public database

A central board-ready talent database developed jointly by regulators, business chambers, and professional institutes should list qualified, certified, and experienced female professionals. This will make it easier for companies to identify potential candidates based on skill, sector experience, and governance training.

Such a platform should bring together a diverse mix of executive-level professionals from finance, business, law, operations, HR, and other critical functions, alongside former CEOs, CFOs, senior government officials, and respected business academics.

Mentorship

We must establish mentorship programs pairing aspiring female leaders with seasoned board members who can guide them through the complexities of governance, boardroom conduct, and strategic decision-making. These relationships can offer invaluable insights, helping women navigate challenges, build confidence, and prepare for the responsibilities that come with board roles. Mentorship also helps demystify board culture and builds the informal social capital often necessary for leadership success.

Inclusion is a journey, not a tick-box

The issue is not the regulation; it is the ecosystem. We cannot expect meaningful inclusion if we do not invest in the infrastructure that supports it. Governance is not just about fulfilling legal requirements – it is about making better decisions, managing risk, and building trust with shareholders and the public.

Inclusion without preparation potentially leads to tokenism. But inclusion with training, mentorship, and opportunity leads to transformational leadership.

There is a well-known Chinese proverb: "The fish rots from the head." Nowhere has this been more evident than in Bangladesh's recent history. Governance failures at the board level have not just triggered isolated incidents, they have contributed to the destabilization and collapse of the entire financial sector parse the economy. From non-performing loans, insider lending, regulatory breaches, to outright fraud, much of it traces back to boards that were poorly governed.

This is not just a matter of corporate mismanagement, it is a systemic failure with national economic consequences. If we are to improve corporate governance in Bangladesh, we must ensure that independent directors be male or female, are truly independent, fully competent, and strategically empowered.

The BSEC's regulation of inclusion of diversity in the board is the right start. But, to ensure effectiveness, now is the time to invest in the capacity, pipeline, and platforms that can turn policy into progress. Now is the time to move from compliance to competence and make a truly effective board that adds value.

Sketch: TBS

Dr Melita Mehjabeen is a Professor at Institute of Business Administration, Dhaka University.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.