169 Companies Without Women Director Face Wrath of Corporate Affairs Ministry!
Corporate Affairs Ministry has said that strict action would be taken against 169 companies for failing to recruit any woman directors. The action would be taken under strict guidelines of Companies Act 2013, which mandates women directors for some specially listed companies.
Infact, there are total of 307 companies, who have failed to recruit any woman director within their Board of Directors. But as of now, action has been initiated against 169 companies.
Corporate affairs minister Arun Jaitley informed the Lok Sabha: “There are 307 companies who have complied with the mandate of law of nominating women to the board of directors. There are 169 companies against whom prosecutions have been launched for failure to nominate women directors,”
Interestingly, 16 companies have appealed against the provision of women directors in their Board; and suitable action has been proposed based on this appeal.
What Is Women Director’s Rule Under Company Act 2013?
As per the second proviso to section 149 (1) of the Companies Act 2013, every listed company shall appoint at least one woman director within one year from the commencement of the second proviso to Section 149(1) of the Act, which was April 1st, 2014.
Hence, action has been initiated as these companies failed to have a women director as of April 1st, 2015.
Besides, every public company having paid up share capital of Rs 100 crore and those where their aggregate “outstanding loans, debentures and deposits” exceed Rs 50 crore, or turnover of Rs. 300 crore in a year needs to have a woman director within their Board.
Besides India, several European countries like Norway, France, Italy, Spain, and Belgium have also made it mandatory to have women as directors. Such provision have been incorporated under Company Act 2013 for empowering women and providing them opportunities to grow and prosper.
As per analysts, once women are induced into the Board, she can encourage other women to join mainstream workforce, and spark a revolution within corporate sector.
Is Companies Act 2013 Too Harsh?
Several businessmen and corporate experts have termed Companies Act 2013 as too harsh and ‘draconian’ which can discourage entrepreneurship and/or create more hurdles in development and growth of business in India.
Last year, Lok Sabha passed an amendment, which removed some of the draconian regulations from Companies Act 2013; such as legal action against company directors and maintaining confidentiality of Board Meetings.
At that time, Minister Arun Jaitley had taunted the harsh rules of the Companies Act 2013 by saying, “A terrorist can get bail, but a company official cannot..” In fact, earlier, the rules were so strict and impractical, that startups could have faced jail if annual tax returns were not filed.
Earlier this year, RBI proposed more reforms under Companies Act, which were especially meant to make foreign investors comfortable and feel safe while conducting business in India.
The rule pertaining to mandatory woman directors is subjective, and open to debate. Do you think action should be taken against those companies which failed to recruit women directors? Do let us know by commenting right here!