Four Companies Fined For Delay In Appointing Female Directors
The Ministry of Corporate Affairs (MCA) recently fined four companies within the last two months for not appointing female directors within the required time frames according to the Companies (Appointment and Qualification of Directors) rules. This action, aimed at three private companies and one under the Maharashtra government, highlights an increased effort to address these issues and promote more gender diversity in boardrooms.
The Registrar of Companies (RoC) under the MCA has imposed fines of ₹485,000 each on JM Financial Properties and Holdings, Shankar Packagings, and Krishna Solvechem, along with some key executives, since mid-October, as seen in the RoC orders reported by The Economic Times.
MSRDC Sea Link, a wholly-owned subsidiary of the Maharashtra State Road Development Corporation, has been asked to pay a Rs185,000 penalty. A senior government official stressed the importance of penalising a state government entity, emphasising the expectation that everyone complies with corporate governance rules and signalling a firmer government stance in the future.
Companies with a paid-up capital of ₹100 crore or more or an annual turnover of ₹300 crore must have at least one woman on their boards, as per the Companies (Appointment and Qualification of Directors) rules. The Companies Act, 2013, specifically Section 149, requires the appointment of female directors in these cases. If the sole female director resigns, the vacancy must be filled at the next board meeting or within three months, whichever comes later.
This year, the government issued several show-cause notices to companies for similar violations. Subsequently, the RoC started issuing orders, considering responses from the concerned companies. Penalties can be applied to both companies and officers responsible for the violation. In such cases, each defaulting company can face a maximum penalty of ₹300,000, and the officer ₹100,000. In the order against JM Financial Properties and Holdings, an entity of the JM Financial Group, and three of its executives, B Mishra, adjudicating officer, and RoC (Mumbai), mentioned that the company had admitted to the delay in appointing a female director.
The affected companies have the option to file appeals against the RoC orders.