Provision 149 of the Companies Act says that it is mandatory to appoint a women director. The provision is for the companies listed in the stock market, companies with a share capital of more than 100 crore and companies with a turnover of 300 crore. Companies with these qualities should appoint a women director. The penalty for non-appointment of women directors is fifty thousand rupees for every officer. If the mistake continues, the rate of penalty is five hundred for each day of business operations without the appointment of a women director. The upper limit of the penalty is three lakh for companies and one lakh for the officer. Gender equality starts from the working environment. The Ministry of Corporate Affairs has a strong vision to ensure gender diversity in corporate decisions. MCA had charged an amount of 4.85 lakh to Krishna Solvechem Limited for the violation of statutory requirements. The company had failed to appoint a women director. Section 149 of the Companies Act insists on the appointment of a women director. It is mandatory to place at least one women director among the board members. The appointment of women directors promotes gender equality and diversity in the corporate leadership. The blog revolves around the real-time case study and extracts the potential points for enriching the business climate.
The case study:
KSCL is engaged in the distribution and import process of solvents, chemicals and drug intermediates. The client base of the company is small and large-scale companies. The company is in Mumbai, Maharashtra. The paid-up capital and turnover of the company are above the limits of thresholds. The company has sufficient money and business operations. The compliances insist on such companies with huge operations to appoint a women director. The paid-up share capital of the company as of March 31, 2022 is 4,45,16,000,00. The turnover of the company is 320,45,26,321,93. The figures show the monetary status of the company. Despite having high value, the company failed to appoint a women director.
The Krishna Solvechem Limited officials said that the rule of MCA is understood by the officials only after the completion of financial annual audits. The company got the awareness in the middle of 2022. Now, the company is searching for the right candidate to represent its operations. As it was late in the appointment process, the officials recorded the company with violations of the laws. The MCA authorities charged the penalty as per the Companies Act. Section 72 of the Companies Act speaks about the penalties to the companies. The case ended up with a penalty of 1, 85500 for the company and 1, 00,000 for the operational officers related to the issue. The maximum upper limit of the penalty is three lakhs.
The representative from the Company Prakash M. Vora attended the case hearing. He explained to the court that the mistake was not with malicious intent. It was due to some unavoidable circumstances. Later, the company appointed a women director and informed the court. The court ordered the company to pay the penalty amount within 30 days. The court requested the authorities to file e-form DIR-12 with the details of the newly appointed women director. If the company fail to pay the penalty within the given period, the cause is a further fine or imprisonment to the company officials. The rule of appointing a women director is a gentle reminder to the officials to respect the skills and leadership of women professionals. Corporate governance framed in India projects the knowledge, skills, values and nature of Indians.
Indian women on the global stage:
Indian women with valid experience in India are the heads of global companies. The inspiring women entrepreneurs around the world are as follows: Leena Nair, Chanel, Sharmistha Dubey, Match Group, Kiran Mazumdar Shaw, Biocon, Anjali Sud, Vimeo, Sonia Sungal, Gap Inc, Aruna Jayanthi, Capgemini, Latin America and Canada, Padmasree Warrior, Fable and Roshni Nadar Malhotra, HCL. These women leaders started their journey from India. They contribute to the growth of other countries. They have established a market for Indian skills and products.
Importance of gender equality:
Gender inequality is the biological difference between males and females. Gender equality is creating a healthy working environment. Female representatives enhance the participative decision-making process. The female representatives understand the common problems and collaborate with all the employees. The following points elucidate the importance of gender equality in women:
- The percentage of women directors around the world goes like this: 6.3 per cent in UAE, 20 per cent in Hong Kong, India, Russia, Japan and Brazil, 31 per cent in the US and Germany, 40 per cent in the UK and Italy, 44 per cent in France.
- Female directors add value to the organisational goals. Comparatively, female directors hold ethical standards.
- Gender inequalities function as a barrier to women’s access to education and job opportunities. In countries with gender equality, women get more access to education and job opportunities.
- Female directors improve the performance of the employees through monitoring, resource allocation, and human resource management.
- Female directors are risk averse. The contribution of ideas to risk, investments, capital expenditure, dividend management, and research development are useful to the employees and the company.
- Countries with gender equality enhance the performance of women directors. This equality leads to improved market performance.
Gender equality is an essential element to bring socialisation and improve performance. Women leaders handle stress and challenges with patience. Appointing women director improve the performance and quality standards of the company.