Ahmedabad RoC Imposes Hefty Penalty for Non-Compliance with Woman Director Rule
The Registrar of Companies (RoC), Ahmedabad, has taken strict action against a company for failing to adhere to mandatory corporate governance norms. A penalty of Rs 3 lakh has been levied on the company, with an additional Rs 1 lakh imposed on one of its directors, for not appointing a woman director as required under the Companies Act, 2013.
Voluntary Disclosure Leads to Penalty
The enforcement action was initiated after the company voluntarily reported its default by filing an application under Section 149(4) of the Act. In this filing, the company also submitted Form GNL-3, designating its whole-time director as the "officer in default" under Section 2(60) of the Act. Through this submission, the company requested that any penalty for the lapse be imposed solely on this designated officer, rather than spreading liability across the board.
Legal Requirements and Prolonged Violation
Under Section 149(1) of the Companies Act, companies with a turnover exceeding Rs 300 crore or a paid-up share capital above Rs 100 crore are mandated to have at least one woman director on their boards. For this particular company, this requirement became applicable from April 1, 2020, as its turnover for the financial year ending March 31, 2020, reached Rs 349.17 crore, surpassing the prescribed threshold.
Despite this clear legal obligation, the company failed to appoint a woman director for an extended period. The non-compliance persisted from April 1, 2020, until January 29, 2024, resulting in a staggering 1,398 days of default. The lapse was eventually regularized when the company appointed an independent woman director effective from January 29, 2024. However, this delayed compliance did not exempt the company and its officer from liability for the duration of the violation.
RoC's Decision and Expert Insights
After a thorough examination of the facts and the company's filings, the RoC, Ahmedabad, concluded that the company had violated the provisions governing board composition. Consequently, the authority imposed the penalties as stated. Chartered accountant Karim Lakhani commented on the broader issue, stating, "Private companies, which form the backbone of India's economy, often lag in structured women director participation. This is frequently due to voluntary or family-driven appointments rather than deliberate diversity initiatives, leading to limited influence on strategic decision-making."
Corporate governance strategist and company secretary Shilpi Thapar emphasized that while the Companies Act, 2013, and SEBI LODR mandate the appointment of women directors in prescribed companies, true governance requires more. She noted, "Research consistently shows that gender-diverse boards outperform in areas such as ethics, oversight, and long-term value creation. It's crucial that their voices actively shape strategy, not just fulfill a regulatory checklist."
This case highlights the increasing scrutiny on corporate compliance and the importance of diversity in boardrooms to enhance governance and performance.
