NEW DELHI: Initiating action for non- compliance, the Corporate Affairs Ministry has asked many unlisted companies to explain why they have not appointed women directors on their Boards as mandated under law.
Thousands of corporates are required to have at least one woman director on their Boards under the provisions of the Companies Act, 2013. Non-compliance can attract penalties.
The ministry has decided to initiate action after noticing that many companies are yet to comply with the woman director norms, according to sources.
The Registrar of Companies (RoCs) has started issuing show cause notices to unlisted firms in this regard, sources said.
Certain class of unlisted companies were required to have at least one woman director on their boards by March 31, 2015. Most provisions of the new law for companies came into effect from April 1, 2014.
After receiving their responses, the ministry would decide on appropriate action against such companies and under the Act, penalties can also be imposed.
As per the norms, a corporate needs to inform the ministry about appointment of a director within a month from the date it is made.
Certain class of listed and unlisted firms are required to comply with the woman director rules. Every company having paid-up share capital of at least Rs 100 crore or a minimum turnover of Rs 300 crore is required to ensure compliance.
Sources said the ministry has sought information from capital markets regulator Securities and Exchange Board of India (Sebi) on companies against whom action has been taken for not having at least one woman director on their Boards.
Earlier this month, leading stock exchanges BSE and NSE issued notices to more than 700 companies for not complying with woman director norms.
In this regard, BSE has issued notices to 530 companies while NSE has served notices to 260 firms.
In February 2014, Sebi had asked listed entities to appoint at least one woman director on their Boards by October 1, 2014 and the deadline was later extended to April 1, 2015.
The capital market watchdog has put in place a four-stage penalty structure wherein fines would increase with the passage of time.