NO SINGLE WOMAN DIRECTOR IN 179 GOVERNMENT-OWNED COMPANIES, PUBLIC SECTOR ENTERPRISES- COMPANY LAW VIOLATION BY PUBLIC SECTOR COMPANIES

 NO SINGLE WOMAN DIRECTOR IN 179 GOVERNMENT-OWNED COMPANIES, PUBLIC SECTOR ENTERPRISES- COMPANY LAW VIOLATION BY PUBLIC SECTOR COMPANIES

NO SINGLE WOMAN DIRECTOR ON THEIR BOARDS IN 179 STATE-OWNED COMPANIES

A significant number of government companies are failing to meet legal requirements. As many as 179 state-owned companies including Public Sector Enterprises, do not have a single woman director on their boards.

This non-compliance affects companies that are required to have at least one woman director under the Companies Act.

REQUIREMENT UNDER THE COMPANIES ACT ,2013

Under Section 149(1) of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, certain classes of companies are mandatorily required to appoint at least one woman director, including:

• ·      Listed companies
• ·Public companies meeting prescribed capital/turnover thresholds

·      Additionally, for listed PSUs, the requirement is reinforced under SEBI (LODR) Regulations, 2015, which mandates:

At least one woman director, and

For top entities, at least one independent woman director

Every listed company and every other public company having paid-up share capital of Rs 100 crore or more or having a turnover of Rs 300 crore or more is required to appoint at least one woman director on its board.

GOVERNANCE IMPLICATIONS

Failure to appoint a woman director is not merely a technical lapse—it reflects:

·      Weak board diversity practices

·      Non-alignment with ESG norms (especially “Social” and “Governance” pillars)

·      Regulatory non-compliance risk, including penalties

GENDER DIVERSITY IN BOARDROOMS

It also contradicts the policy intent of improving gender diversity in boardrooms, especially in public sector undertakings that are expected to set governance benchmarks

WHY REGISTRAR OF COMPANIES ARE RELUCTANT TO INITIATE ACTION AGAINST 179 PUBLIC SECTOR ENTERPRISES?

The jurisdictional Registrar of Companies (ROC) under the Ministry of Corporate Affairs can:

·      Initiate adjudication proceedings

·      Impose penalties on the company and officers in default

In listed PSUs, Securities and Exchange Board of India may:

• ·      Levy fines
• ·      Freeze promoter shareholding (in extreme cases of prolonged non-compliance)

WHY 74 WOMEN MPs IN THE PARLIAMENT HAVE NOT RAISED THEIR VOICES FOR NON-APPOINTMENT OF WOMEN DIRECTORS ?

As of June 2024, there are 74 women MPs elected to the 18th Lok Sabha, accounting for approximately 13.6% of the total 543 seats.

It is shocking to note that even a single women MP has raised their voices in the Parliament for these violations.

WHY THIS HAPPENS IN PSUS?

This issue is particularly prevalent in government-owned entities due to:

·      Delays in appointments by administrative ministries

·      Vacancies pending ACC (Appointments Committee of the Cabinet) approvals

·      Over-reliance on government nomination processes rather than independent search mechanisms

STRATEGIC TAKEAWAY

For compliance officers and board advisors:

·      Ensure continuous board composition monitoring

·      Maintain a pipeline of eligible woman candidates

·      Trigger early escalation to administrative ministries in case of PSU vacancies

·      Document compliance efforts to mitigate liability exposure.

#YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295,