MCA Penalises Company for not Timely Appointing Woman Director Post-Resignation of Earlier Director [Read Order]

The Ministry of Corporate Affairs (MCA), has imposed penalties on Lava International Limited and its directors for failure to appoint a woman director within the prescribed time after the resignation of the existing woman director, in violation of the Companies Act, 2013.

The company had crossed the paid-up share capital threshold of ₹100 crore in July 2017 and this required the company to appoint at least one woman director.

The company had complied initially by appointing a woman director in August 2017. However, after her resignation on 22 August 2023, the act required the vacancy to be filled at the next Board meeting or within three months from the date of vacancy whichever was later.

The next board meeting was held on 1 September 2023 and the outer time limit for appointment expired on 21 November 2023.

However, the company appointed a new woman director only on 20 May 2024. This resulted in a delay of 179 days, with the default period calculated from 22 November 2023 to 19 May 2024.

A notice was issued to the company and its officers. In response, the company and the concerned officers accepted the non-compliance and requested that a penalty order be passed.

The adjudicating officer declined the request for reduction of penalty and proceeded to levy penalties as per law, also directing that the violation be disclosed in the forthcoming Board Report as part of corporate governance disclosures.

Accordingly, a penalty of ₹1,39,500 was imposed on the company. Further, penalties of ₹1,00,000 each were imposed on the officers in default, including multiple directors and responsible officials.

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