Five Years On: Pakistan's Mandatory Female Director Regime and the Limits of Quota-Based Reform

In my 2020 post on this Blog, I argued the Securities and Exchange Commission of Pakistan's (‘SECP’) newly-introduced mandatory female director requirement risked becoming an exercise in tokenism—a regulatory tick-box producing numerical compliance without substantively diversifying Pakistani corporate boards.

The mandate, contained in the SECP's 2017 Code of Corporate Governance, responded to a striking imbalance: fewer than one in ten directors of Pakistan's listed companies at the time was a woman. The regulation required every listed company to appoint at least one female director to its board. My concern in 2020 was that the minimum threshold, applied to a market dominated by family-owned corporations, would do little to disrupt a pattern already visible in the 2017 data: the appointment of a single woman, often related to the controlling shareholders, with no wider shift in how Pakistani boards were composed.

Six years later, with fresh empirical data in hand, the question is whether that concern was well-founded. The honest answer is: partly, but not entirely. The mandate may have succeeded on its own terms in the literal sense, but not on broader aims. The lesson is one Pakistan's regulators, and other jurisdictions experimenting with quota-based interventions, would do well to consider.

The most striking development since 2020 is the sheer scale of numerical compliance. Drawing on SECP data, approximately 87% of listed Pakistani companies now have at least one woman on the board, up from roughly 38% before the quota was introduced.3 For comparison, only 31% of listed companies had at least one woman director in 2017, and 58% by 2019. The mandate has clearly moved the needle on the threshold question of whether women appear on Pakistani boards at all. By that metric, the SECP's intervention is a regulatory success. The regulator has pursued enforcement seriously, and the result shows. Compliance now sits at levels comparable to India's experience under the Companies Act 2013, which produced near-universal numerical compliance within a few years.

The harder question is what that 87% actually represents. A statute can secure attendance. It cannot, on its own, secure participation. Here, the evidence is less encouraging and it confirms, in significant measure, the concerns raised in 2020.

Recent research suggests that family-owned firms in Pakistan have responded to the quota by populating boards with family-affiliated women: a practice primarily aimed at avoiding 'outsiders', thereby ensuring the protection of family interests and the maximisation of socio-emotional wealth. A separate study, drawing on PSX data between 2009 and 2023, finds that the governance benefits of female board representation—measured through reduced stock price crash risk —accrue meaningfully only when the women in question hold professional qualifications or financial expertise. Family ownership, the same study finds, weakens this relationship materially.

The comparative picture is equally striking. Among major Asian emerging economies, Pakistan has by far the lowest 'critical mass' rate. Only 4.2% of Pakistani family firms have three or more women on their boards, compared with 25.2% in Malaysia, 15.0% in China, and 13.4% in India. The 'critical mass' threshold, typically identified in diversity literature as the point at which female board representation begins to drive material governance change, remains, in Pakistan, statistically out of reach. Against this background, the SECP’s recent moves are worth weighing carefully.

To its credit, the SECP has not treated the 2017 mandate as the end of the conversation. Since 2020, there have been continual and layered interventions. The most consequential are the SECP's 2024 directions to listed companies to disclose gender pay gap data in their annual reports and on their websites. Disclosure of this kind, rather than quota, is the harder regulatory work. Yet, disclosure-based reform in Pakistan is itself now showing strain. In December 2024, the SECP publicly noted that the annual accounts of listed companies revealed “very limited adherence” to the gender pay gap disclosure requirement, despite “extensive advocacy and engagement”. Reminders were reissued in February 2025 and again in January 2026, with the threat of enforcement action. By its own admission, the SECP is struggling with a comparatively modest reporting obligation, even after securing 87% compliance with the more substantive director-appointment mandate.

Why? The most plausible answer is that quota mandates are easier to enforce than substantive disclosure mandates. Counting whether a board has a female director is a binary check. Assessing the integrity of gender pay gap data, the comparability of disclosed figures, or the quality of underlying governance processes is not. Pakistan's regulatory experience suggests something deeper. Comply-or-explain regimes,  pioneered in the UK, presuppose an institutional and enforcement environment that does not yet exist here in equal measure.

On balance, the five-year picture is more nuanced. While the mandate has worked numerically, it has not transformed the substantive composition of Pakistani boards. Disclosure-based interventions that might address the substantive gap are, themselves, stalling. Instead of being a stepping-stone to deeper reform, the quota risks becoming a permanent floor, a threshold that never quite becomes representation.

Three regulatory responses are worth consideration here. First, the SECP should consider moving beyond a one-director floor toward a graduated critical-mass requirement, comparable to Malaysia's 30% target, implemented over a defined timeline. The evidence on critical mass is robust enough across jurisdictions that a regulator willing to take the next step would not be operating without empirical support.

Second, an independence requirement for female directors must be specifically incorporated. The current mandate is silent on whether the female director appointed pursuant to the statutory mandate must be independent. The evidence suggests that this silence is not neutral — it permits, and in family-firm contexts effectively encourages, related-party appointments diluting the governance benefits the mandate was designed to deliver.

Third, the disclosure regime needs teeth. The SECP's 2024 directions were sound in principle; weak enforcement is what is failing them. Without meaningful penalties for non-disclosure, comply-or-explain becomes explain, and eventually, not even that.

Pakistan's experience between 2020 and 2026 is not, ultimately, a story of failed reform. The mandate worked — but only the mandate. In this and in much else, Pakistani corporate governance has become adept at producing the appearance of change without its substance. The harder work lies in that distinction. The next phase of reform will turn on whether the SECP, and the corporations it regulates, are prepared to address structural questions. The deeper question, what Pakistani corporate governance is willing to become, remains, for now, unanswered.

Rafae Saigal is a Partner at Saigal, Tarar & Leghari LLP.