Understand the process and requirements for the appointment of a woman director in accordance with regulatory resolutions. Explore the applicability of women directors and independent directors, ensuring compliance with the Companies Act. Find all you need to know about resident directors.
In the modern corporate landscape, the role of women directors in companies has gained significant attention. The Companies Act of 2013 in India has provisions specifically addressing the appointment and role of women directors.
This article aims to provide a comprehensive overview of Section 149(1) of the Companies Act 2013, the role of women directors, their appointment, director identification number, consent to act as a director, procedure for appointment, tenure, penalties for non-compliance, and conditions for appointment of directors.
Abstract
The Companies Act of 2013 in India has brought about significant changes in the corporate governance landscape, particularly with regard to the appointment and role of women directors. This article delves into the various aspects of the Act, including the legal provisions, requirements, and penalties associated with the appointment of women directors in companies.
Section 149(1) of the Companies Act 2013
According to Section 149(1) of the Companies Act, 2013, it is mandated that every company must have a minimum of three directors for a public company, two directors for a private company, and one director for a One Person Company.
The maximum limit for the appointment of directors is set at fifteen. If a company wishes to appoint more than fifteen directors, it can do so by obtaining approval through a special resolution in a general meeting, without the need for Central Government approval.
Role Of Woman Director
The second stipulation in Section 149(1) of the Act specifies that certain categories of companies, as outlined in the Rules, are required to include at least one woman director on their board.
As per Rule 3, the following categories of companies must adhere to this requirement:
- Every listed company
- Every other public company with:
- Paid-up share capital of Rs.100 crore or more, or
- Turnover of Rs.300 crore or more.
Upon meeting the aforementioned criteria, such companies are obligated to appoint a woman director to their board within six months from the date when the conditions are fulfilled. The determination of paid-up share capital or turnover is based on the figures as of the last date of the most recent audited financial statements.
Appointment of Woman Director
Listed Companies:
– Every listed company must appoint at least one woman director within one year from the commencement of the second proviso to Section 149(1) of the Act.
Other Public Companies:
– Public companies with a paid-up share capital of Rs. 100 crores or more or turnover of Rs. 300 crores or more must appoint at least one woman director within one year from the commencement of the second proviso to Section 149(1) of the Act.
Grace Period for New Companies:
– Companies incorporated under the Companies Act, 2013 have a grace period of six months from the date of incorporation to comply with the woman director appointment requirement. Existing companies under the Previous Companies Act must comply within one year.
Intermittent Vacancy:
– In the case of an intermittent vacancy of a woman director, the board of directors must fill the vacancy within three months from the date of the vacancy or not later than the immediate next board meeting, whichever is later (Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014).
Director Identification Number
The Director Identification Number (DIN) is a unique identification number allotted by the Central Government to individuals who wish to become directors or are already directors of a company.
Here are the key points related to the Director Identification Number:
- It is an 8-digit unique identification number with lifelong validity, stored in a centralised database.
- A person is assigned only one DIN, which remains the same even if they hold directorship in multiple companies.
- When submitting returns, applications, or any company-related information, the director must mention their DIN below their signature
Consent to Act as Director
Consent to act as a director is a crucial legal requirement that involves written consent provided by an individual who intends to act as a director of a company. Here are the key points related to the consent to act as a director:
- The consent to act as a director is a written document that signifies an individual’s voluntary acceptance of the appointment to act as a director on the board of directors of a company
- It is a mandatory requirement for individuals who are being appointed as directors to provide their consent in writing. Failure to provide this consent can lead to the appointment being considered void
- The consent to act as a director typically includes the director’s details and serves as a written record that the director understands the role they are about to undertake and their associated duties
Procedure for Appointment of Women Director on Board
The process for appointing a woman director involves the following steps:
Consent and Disclosure:
– The nominated woman director must submit her consent to act as a director using the prescribed Form DIR-2. Additionally, she is required to file a disclosure about any disqualifications in Form DIR-8 to the company.
Shareholders’ Approval:
– The company is required to convene a general meeting and secure the approval of shareholders for the appointment of a woman director through a resolution.
Listing Compliance:
– In the case of listed companies, details of the general meeting proceedings must be disclosed to the stock exchange within 24 hours from the conclusion of the meeting. The information should also be posted on the company’s website within two working days.
Filing with ROC:
– Following the resolution’s passage in the general meeting, the company must file Form MGT-14 within 30 days. Additionally, Form DIR-12, containing particulars of the woman director’s appointment, should be submitted within 30 days of the appointment
Record Entries:
– The necessary entries related to the woman director’s appointment must be made in the director and key managerial personnel register, as well as the register of contracts in which the woman director has an interest (Form MBP-4).
Vacancy Fulfilment:
– Any intermittent vacancy for a woman director should be filled within three months from the vacancy date or before the next board meeting, whichever occurs earlier. A woman director may serve as a non-executive or executive director.
Tenure of Women Directors
The tenure for the appointment of a woman director extends until the subsequent Annual General Meeting (AGM) from the date of her appointment. Re-appointment at the general meeting is permissible. However, similar to other directors, the tenure of a woman director is subject to retirement by rotation as per Section 152(6) of the Act. If she wishes, she has the option to resign at any time by providing notice to the company.
Penalty for Non-Compliance of Appointment of Woman Director
The Companies Act, 2013 does not stipulate a specific penalty for failing to appoint a woman director. In such cases, Section 172 of the Act becomes applicable, addressing non-compliance issues related to the appointment of a woman director. According to Section 172, both the company and any officer in default may face penalties. The prescribed fine ranges from a minimum of Rs.50,000 to a maximum of Rs.5,00,000.
Conditions for Appointment of Directors
The conditions for the appointment of directors in India, as per the Companies Act 2013, encompass several key aspects and requirements. Here are the essential points related to the appointment of directors in India:
Residence Requirement:
Section 149(3) of the Companies Act 2013 mandates that every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
Non-Resident Indian (NRI) Directors:
The Companies Act, 2013, along with the Companies (Appointment and Qualification of Directors) Rules, 2014, and the Foreign Exchange Management Act, 1999, does not prohibit the appointment of Non-Resident Indians as directors in Indian companies, subject to adherence to relevant provisions.
Foreign Directors:
There is no specific requirement in the Companies Act, 2013 that prohibits the appointment of any person who is a foreigner as a director of a company in India.
Educational Qualifications:
There is no minimum educational qualification required to hold the post of director in a company in India.
Age Requirement:
The individual should be between 25 to 70 years of age for appointment as a director in a private company.
Maximum and Minimum Number of Directors:
A private limited company can appoint a maximum of 15 directors, and the number of directors and additional directors of a company together shall not exceed the maximum strength fixed for the Board of Directors by the Articles of Association.
Special Resolution for Reappointment:
An independent director can be appointed for a term of up to five consecutive years on the Board. Reappointment for a further five years requires a special resolution passed in a general meeting and disclosure of such appointment in the Board’s report.
Conclusion
In conclusion, the appointment and role of women directors in companies are governed by specific provisions under the Companies Act of 2013. Understanding these provisions is crucial for companies to ensure compliance and effective governance.
If you’re looking to appoint a woman director to your organisation but are unsure about the steps, look no further. The experts at Vakilsearch are well-versed in company law compliance. With our expertise, you can appoint a women director in no time with little to no hassle.
