How woman director are essential
Empowering Change:
A Guide to Appointing a Woman Director
In the ever-evolving corporate governance landscape, the appointment of
women directors and independent directors has become integral to ensuring
transparency and accountability in Indian companies. The Companies Act 2013
ushered in a new era by introducing these concepts to the Board of Directors,
emphasizing their significant roles in the management of businesses.
This article delves into the provisions, applicability, appointment
procedures, tenures, and penalties for women directors and independent directors
in India.
Women directors often bring diverse perspectives and experiences to the
boardroom, which can lead to better-rounded decision-making. Women directors
also serve as role models, and therefore improve female employees'
performance and boost companies' image.
The empirical results show that the proportion of
non-executive female directors and independent female directors have
significant positive influence on corporate performance. The result shows that the higher the proportion
of female directors is, the better off the corporate performance would be.
Companies Beware: Failing to Appoint a Woman
Director Can Result in Penalties.
As per the data on Google dated 12 February 2024, in total Rs. 27crores
was the penalties imposed on the companies for noncompliance of appointing
woman director to their Boards.
In last few months, the Registrar of Companies (ROC) under the MCA has
imposed penalties of ₹485,000 each on JM Financial Properties and Holdings,
Shankar Packagings and Krishna Solvechem and some of their key executives since
mid-October, according to a copy of the ROC orders seen by Economic times.
Applicability
of Women Directors
Section 149(1) of the Companies Act 2013 mandates certain companies to
appoint at least one woman director to their Board. The Companies (Appointment
and Qualifications of Directors) Rules, 2014, provide a clear framework for
this provision.
Benefits of having women on boards
• Better decisions, better results. Having women on boards improves companies'
strategic decision-making, leading them to consider wider
ranges of options. ...
• Attracting and retaining
talent. ...
• Transformational
leadership. ...
• More ethical and
responsible management.
Who Needs to Appoint a Woman Director?
As per Rule 3 of the Rules, the following companies must appoint a woman
director:
·
Every listed company.
·
Every other public company has either:
·
A paid-up share capital of Rs. 100
crore or more.
·
A turnover of Rs. 300 crore or more.
Once a company meets these conditions, it must appoint a woman director
within six months from the fulfilment date, based on the last audited financial
statements.
Appointment of Women Directors
The process of appointing a woman director involves several steps:
The proposed woman director must submit her consent to act as a director
using the prescribed Form DIR-2 and disclose any disqualifications in Form
DIR-8 to the company.
The company should conduct a general meeting and obtain shareholders’
approval for the appointment through a resolution.
Listed companies must disclose the general meeting proceedings to the
stock exchange within 24 hours and post them on their website within two
working days.
Following the appointment, the company must file Form MGT-14 and Form
DIR-12 with the Registrar of Companies (ROC) within 30 days.
Necessary entries must be made in the director and key managerial
personnel register and the register of contracts in which the woman director
has an interest (Form MBP-4).
A woman director can serve as either a non-executive or executive
director. If there’s an intermittent vacancy, it should be filled within three
months or by the next board meeting, whichever comes first.
The tenure of a woman director lasts until the next Annual General
Meeting (AGM) from the appointment date, with an option for reappointment.
However, like other directors, a woman director’s tenure is subject to
retirement by rotation, as specified in Section 152(6) of the Act. She can also
resign by providing notice to the company.
The Companies Act 2013 does not specify a particular penalty for the
non-appointment of a woman director. Non-compliance is penalized under Section
172 of the Act, resulting in a fine of not less than Rs. 50,000 but potentially
extending up to Rs. 5,00,000 for the company and every officer in default.
Ø
"What are your
thoughts on the importance of diverse leadership on Board Share your
perspective in the comments below!"
Blog by:
Seema Mhatre & Asociates
ACS Seema Shashank Mhatre
Practicing CS & Certified Independent Director from
IICA
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You think compliance
is expensive try Non compliance
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