Consequences of Non- Appointment of Women Director in the Board Composition

Consequences of Non- Appointment of Women Director in the Board Composition .  
As per Section 149 of the Companies Act, 2013, these following companies are required to appoint at least one-woman director on their Board:
Listed Companies – Every company whose securities are listed on a recognized stock exchange must have at least one-woman director.
Public Companies Meeting Certain Criteria – Any public company that satisfies either of the following conditions:

Paid-up share capital of Rs.100 crore or more, or

Turnover of Rs.300 crore or more

Such companies must appoint at least one-woman director within six months from the date of incorporation or within the timeline prescribed for filling a vacancy if one arises.
 If a company falls under the above criteria after incorporation due to an increase in turnover or paid-up capital, it must comply with the requirement within six months from such an event.
If the position of a woman director becomes vacant, it must be filled within three months or the next Board meeting, whichever is later.
Applicable Provisions
The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
In Shankar Packaging Limited, ROC, Mumbai, vide his order dt. 30/10/2023 has stated that As per the Financial Statements filed by the company, its paid up share capital  was Rs.2,80,49,530/- and turnover was Rs.398,14,29,906/- as on 31/03/2022 accordingly company was required to appoint a woman director based on the thresholds stated above, but is failed to do so, thereby violating provisions of Section 149(1) of the Companies Act, 2013. The company has admitted the delay in appointment of woman director.
Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 27/02/2024.The authorised representative stated that :

The women director was appointed on 13/05/2023 along with the other three director.

The violation was not intentional.

Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

No of days default

To whom penalty imposed

Total Penalty as per section 172 of the Act

Maximum Penalty

Actual Penalty

271 days

On Company

50,000 + (500*270) = 1,85,000

3,00,000

1,85,000

On 1ST director

50,000 + (500*270) = 1,85,000

1,00,000

On 2ND director

50,000 + (500*270) = 1,85,000

1,00,000

On 3rd director

50,000 + (500*270) = 1,85,000

1,00,000

Confirming ROC Order
After carefully considering the Adjudication Order of the Registrar of Companies, Mumbai, submissions made by the Appellants in their appeal/ application, oral submission of the authorized representative, this forum is of the view that no inherent  defect is found in ROC's Adjudication Order dt.30/10/2023 and ROC, Mumbai has  imposed fixed penalty as per law i.e. Section 172 of the Companies Act, 2013.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Shankar Packaging Limited being a public company does not fall under the criteria of section 446B of the companies Act 2013.
CCL Observations:
Based on the facts and legal provisions analysed in this case, it is evident that Shankar Packaging Limited was obligated to appoint a woman director in compliance with Section 149(1) of the Companies Act, 2013, as its turnover exceeded Rs.300 crore as of 31/03/2022. The company failed to meet this statutory requirement within the prescribed timeline, resulting in a violation and subsequent penalties imposed by the Registrar of Companies (ROC), Mumbai.
Despite the company’s argument that the delay was unintentional, the law mandates strict adherence to governance requirements. The Regional Director (RD), Mumbai, upon reviewing the appeal, found no fundamental defect in the ROC's Adjudication Order dated 30/10/2023, confirming the penalties under Section 172 of the Companies Act, 2013.This case highlights the importance of timely compliance with statutory provisions to avoid financial penalties and regulatory scrutiny.
Download MCA Adjucation Order

As per Section 149 of the Companies Act, 2013, these following companies are required to appoint at least one-woman director on their Board:

Listed Companies – Every company whose securities are listed on a recognized stock exchange must have at least one-woman director.

Public Companies Meeting Certain Criteria – Any public company that satisfies either of the following conditions:

Paid-up share capital of Rs.100 crore or more, or
Turnover of Rs.300 crore or more

Such companies must appoint at least one-woman director within six months from the date of incorporation or within the timeline prescribed for filling a vacancy if one arises.

If a company falls under the above criteria after incorporation due to an increase in turnover or paid-up capital, it must comply with the requirement within six months from such an event.

If the position of a woman director becomes vacant, it must be filled within three months or the next Board meeting, whichever is later.

Applicable Provisions

The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

In Shankar Packaging Limited, ROC, Mumbai, vide his order dt. 30/10/2023 has stated that As per the Financial Statements filed by the company, its paid up share capital was Rs.2,80,49,530/- and turnover was Rs.398,14,29,906/- as on 31/03/2022 accordingly company was required to appoint a woman director based on the thresholds stated above, but is failed to do so, thereby violating provisions of Section 149(1) of the Companies Act, 2013. The company has admitted the delay in appointment of woman director.

Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 27/02/2024.The authorised representative stated that :

The women director was appointed on 13/05/2023 along with the other three director.
The violation was not intentional.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

No of days default	To whom penalty imposed	Total Penalty as per section 172 of the Act	Maximum Penalty	Actual Penalty
271 days	On Company	50,000 + (500*270) = 1,85,000	3,00,000	1,85,000
	On 1ST director	50,000 + (500*270) = 1,85,000	1,00,000	1,00,000
	On 2ND director	50,000 + (500*270) = 1,85,000	1,00,000	1,00,000
	On 3rd director	50,000 + (500*270) = 1,85,000	1,00,000	1,00,000

Confirming ROC Order

After carefully considering the Adjudication Order of the Registrar of Companies, Mumbai, submissions made by the Appellants in their appeal/ application, oral submission of the authorized representative, this forum is of the view that no inherent defect is found in ROC's Adjudication Order dt.30/10/2023 and ROC, Mumbai has imposed fixed penalty as per law i.e. Section 172 of the Companies Act, 2013.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Shankar Packaging Limited being a public company does not fall under the criteria of section 446B of the companies Act 2013.

CCL Observations:

Based on the facts and legal provisions analysed in this case, it is evident that Shankar Packaging Limited was obligated to appoint a woman director in compliance with Section 149(1) of the Companies Act, 2013, as its turnover exceeded Rs.300 crore as of 31/03/2022. The company failed to meet this statutory requirement within the prescribed timeline, resulting in a violation and subsequent penalties imposed by the Registrar of Companies (ROC), Mumbai.

Despite the company’s argument that the delay was unintentional, the law mandates strict adherence to governance requirements. The Regional Director (RD), Mumbai, upon reviewing the appeal, found no fundamental defect in the ROC's Adjudication Order dated 30/10/2023, confirming the penalties under Section 172 of the Companies Act, 2013.This case highlights the importance of timely compliance with statutory provisions to avoid financial penalties and regulatory scrutiny.