Four companies fined for failing to hire female directors on time

The Ministry of Corporate Affairs (MCA) has imposed penalties on four companies in in about two months for their failure to appoint female directors within the stipulated time frames under the Companies (Appointment and Qualification of Directors) rules.

The action, against three private companies and one run by the Maharashtra government, signals a fresh crackdown against such lapses amid sharpened focus on having more women in the boardroom.

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 ET.


MSRDC Sea Link, a wholly owned arm of the Maharashtra State Road Development Corporation, has been slapped with a penalty of ₹185,000. "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," a senior government official said on condition of anonymity, indicating a further hardening of government stance on the issue in the coming months.

Under the Companies (Appointment and Qualification of Directors) rules, all listed firms and large public limited companies with paid-up capital of ₹100 crore or more or minimum annual turnover of ₹300 crore must appoint at least one woman to their boards. Section 149 of the Companies Act, 2013, mandates the appointment of female directors in such categories of companies. If the sole female director quits, the vacancy has to be filled by the next board meeting or within three months, whichever is later.

Earlier this year, the government had issued dozens of show-cause notices to companies for such violations. Subsequently, the RoC started issuing orders, factoring in responses from the companies concerned. Both the companies and officers responsible for the violation can be penalised. Each defaulting company can be subject to a maximum penalty of ₹300,000 and the officer ₹100,000 in such cases. 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), said the company had admitted to the delay in the appointment of a female director.

The aggrieved firms can file appeals against the RoC orders.