 "Govt slaps penalty on four firms that failed to hire female directors")
The Ministry of Corporate Affairs (MCA) has fined four companies in the last two months for failing to appoint female directors according to the timelines stated in the Companies (Appointment and Qualification of Directors) Rules, The Economic Times (ET) has reported. Three private and one Maharashtra government company were involved. The development sheds light on the government's emphasis on having more female leaders in company boardrooms.
The Registrar of Companies (RoC) under the MCA has imposed penalties amounting to Rs 4,85,000 each on JM Financial Properties and Holdings, Shankar Packagings Krishna Solvechem, and some of their key officials since mid-October, the ET report said, citing a copy of the RoC orders.
The government entity MSRDC Sea Link, a wholly-owned arm of the Maharashtra State Road Development Corporation, has been penalised Rs 1,85,000. A senior government official told The Economic Times, "The order against a state government entity, in addition to the private ones, shows that corporate governance rules are to be complied with by everyone, and there is no special treatment to anybody." Furthermore, the officer indicated a hardening of the government's stance on the issue in the coming months.
What do the rules say about female directors?
According to Companies Rules (Appointment and Qualification of Directors), all listed companies and large public limited firms with paid-up capital of Rs 100 crore or more or having a minimum turnover of Rs 300 crore must appoint at least one female to their board of directors. Section 149 of the Companies Act, 2013, makes it mandatory for companies to appoint female directors in such categories of companies. If a female director quits, the vacancy must be filled by the next board meeting or within three months, whichever is later, the ET report said.
Multiple show-cause notices issued for violations
The ET report said that the government has issued dozens of show-cause notices to companies for non-compliance with appointment and qualification of director rules. Having issued the notices, the RoC started issuing orders based on the responses received from the companies concerned. According to the rules, both the companies and the officers responsible can be penalised. The rules say each defaulting firm can be subjected to a maximum fine of Rs 300,000, and the officer concerned can be fined up to Rs 100,000 in such cases.
In the case of JM Financial Properties and Holdings, a subsidiary of the JM Financial Group, the company admitted to a delay in the appointment of a female director.