Non-Appointment of Woman Director u/s 149(1) of Companies Act: Recent Judicial Trends and MCA Crackdowns [Read Order]

While going through the several adjudication orders that have been passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, we can see that several companies have failed to appoint a woman director under Section 149(1) of the Companies Act, 2013. In this era of women's empowerment, where a company that satisfies the conditions under Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, fails to appoint a woman director, it clearly shows how irresponsible and male-dominated a company or a firm can be.

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Thus, the non-appointment of a woman director under Section 149(1) of the Companies Act, 2013, should be seen as a gross violation, and the defaulting companies and their directors should be penalised and directed to rectify their mistake. In certain cases, it is due to genuine reasons, such as the resignation of a former woman director and a delay in finding another appropriate woman director for the post. It is also vital to note that by virtue of the Company Rules, 2014, the company should fill the vacancy for the post of women director within 3 months.  But the sad part is that the delay is prolonged to more than a year, which in no way can be justified or accepted and clearly shows the irresponsible behaviour of the company and its directors. 

Read More: MCA imposes Penalty for Failure to appoint a Woman Director u/s 149(1) of Companies Act

Section 149(1) and Appointment of Women Director

Section 149 of the Companies Act, 2013, which deals with the composition of the Board of Directors, states that: 

“a) Every company shall have a Board of Directors consisting of individuals as directors

and shall have-

(a) A minimum number  directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and

(b) A maximum of fifteen directors:

Provided that a Company may appoint more than fifteen directors after passing a

special resolution:

Provided further that such class or classes of companies as may be prescribed shall have at least one woman director.”

A clear reading of Section 149(1) of the Companies Act 2013, reveals that certain classes of companies, as mandated under the Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, are required to appoint a woman director.

Section 149(1) is a beneficial provision drafted by the legislators for the upliftment of women. It ensures that women are given representation on the board of a company.  Now we will look into the classes or categories of companies or firms that have to mandatorily appoint a woman director. This criterion is given under  Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The following class of companies shall appoint at least one woman director according to  Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and they are as follows:

(i) Every listed company

(ii) Every other public company having

(a) Paid-up share capital of one hundred crore rupees or more; or

(b) Turnover of three hundred crore rupees or more.

Judicial Trends

In this article, we will also be going through the recent judicial trends with respect to the non-appointment of women directors.

Failure to Appoint Woman Director Since Incorporation: MCA penalizes Rs.2.85 lakhs on Company & MD

In the adjudication order passed by the Ministry of Corporate Affairs ( MCA ) Registrar of Companies under Section 454 of the Companies Act, 2013, a penalty of Rs 2.85 lakhs has been imposed on the company, Aastha Broadcasting Network Limited, and its directors for failing to appoint a woman director since its incorporation.

In this case, the adjudicating authority, by going through the MCA21 database, noted that the company has not appointed even a single woman director since its incorporation.

MCA imposes Penalty on listed company for failure to appoint Woman Director

A penalty of 3.13 lakhs was imposed on a listed company, TPI India Limited, for its failure to appoint a woman director according to Section 149(1). It was noted by the adjudicating authority that, as a listed company, it was mandatory to appoint a woman director, but the company failed to do so on time. Although it later appointed Ms. Anjali Sapkal on 15.01.2023 and filed DIR-12, there was a delay in filling the vacancy after Mrs. Darshana Bharat Parekh stepped down on 13-11-2021.

MCA imposes penalty of Rs. 4.85 lakhs on Company & Directors for failure to appoint Woman Director

In the adjudication order passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, a penalty of Rs 4.85 lakhs has been imposed on the company and directors for the failure to appoint a woman director for the company under Section 149 of the Companies Act, 2013.

During the hearing, the authorised representative of the company submitted that the company was trying to find a suitable woman candidate for directorship who has the required skill set but so far has failed to find one, and therefore the delay.

The adjudicating authority concluded that there was a serious breach of Section 149 of the Act, as the company was aware of its statutory responsibility to appoint a woman director.

In conclusion, the failure to designate a woman director under Section 149(1) of the Companies Act should be considered a grave infringement, and the defaulting firms and their directors should be penalised and directed to appoint a woman director as soon as they are alerted or warned. Thus, undoubtedly, Section 149(1) of the Companies Act is a helpful clause for the advancement of women in our society, as it guarantees that women are represented on a company's board.

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