Lok Sabha Question No. 27 (STARRED), answered on 2024-02-05
Subject: Representation of Women in Board of Directors in Companies
Ministry: CORPORATE AFFAIRS
Asked by: S. Venkatesan

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS LOK SABHA

## STARRED QUESTION NO. *27

ANSWERED ON FEBRUARY 5, 2024/MAGHA 16, 1945 (SAKA)

REPRESENTATION OF WOMEN IN BOARD OF DIRECTORS IN COMPANIES

## QUESTION

*27. SHRI S. VENKATESAN:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) whether it  was  mandated  by  Section  149  of  the  Companies  Act,  2013  and relevant rules for companies to must appoint at least one female to their Board of Directors in all listed companies and large public limited firms with paid-up capital of Rs. 100 crore or more or having a minimum turnover of Rs. 300 crore;

- (b) if so, the details thereof including the number of companies subjected to penal actions  since  2015  Financial  Year  to  till  date  for  non-compliance  along  with  the amount of penalty collected year-wise;

- (c) whether there is any monitoring mechanism with the Government regarding participation of women members in the Board Meetings to ensure their involvement in company's affairs; and

- (d) if so, the details thereof?

## ANSWER

The Minister of Finance & Corporate Affairs.       (SMT. NIRMALA SITHARAMAN)

( वित्त और कारपोरेट मामलो के मंत्री

)                                    (

श्रीमती निममला सीतारामि )

(a) to (d): A statement is laid on the Table of the House.

STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. *27 FOR ANSWER ON 05.02.2024.

## ANSWER

(a) to (d): Yes Sir. As per second proviso to section 149(1) of the Companies Act, 2013 read with rule 3 of the Companies (Appointment and Qualification of Directors)  Rules,  2014,  every  listed  company  and  every  unlisted  public company  having  paid-up  share  capital  of  Rs  100  crores  or  more  or  having turnover of Rs 300 crores or more must appoint at least one woman director on its Board.

The offence in respect of non-appointment of woman  director was decriminalized by Companies (Amendment) Act, 2020 and made adjudicable by specifying penalty provisions in section 172. Prior to that, the offence was punishable with fine and was a compoundable offence.

The Securities and Exchange Board of India (SEBI) has informed that  SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 require the board of directors of listed entities to have at least one woman director. This requirement is applicable to all listed entities except the following:

- i. a listed entity having paid up equity share capital not exceeding Rs. 10 crore and net worth not exceeding Rs. 25 crore;
- ii. a  listed  entity  which  has  listed  its  specified  securities  on  the  SME Exchange.

As  per SEBI's circular  dated  May  03,  2018,  which  became  effective  from September 30, 2018, the stock exchanges have been empowered to levy fine/ take action in case of non-compliances with the requirements pertaining to having woman director in the Board of directors.

As  and  when  any  non-compliance  in  respect  of  mandated  companies  not having  woman  director  comes  to  the  knowledge,  the  Ministry  and  Stock Exchanges/SEBI have been initiating necessary action against such companies.

The  number  of  companies  subjected  to  penal  actions  for  non-appointment woman director with amount of fine, compounding fee or penalty collected financial year-wise are as under:

| FY                          | Resulted in fine / compounding fee/ penalty (In lacs)     | Resulted in fine / compounding fee/ penalty (In lacs)   |
|-----------------------------|-----------------------------------------------------------|---------------------------------------------------------|
|                             | No of companies against which penal action has been taken | Amount collected as fine / compounding fee/ penalty     |
| 2015-16                     | 3                                                         | 3.51                                                    |
| 2016-17                     | 20                                                        | 33.00                                                   |
| 2017-18                     | 3                                                         | 1.09                                                    |
| 2018-19                     | 3                                                         | 1.57                                                    |
| 2019-20                     | 1                                                         | 2.50                                                    |
| 2020-21                     | 10                                                        | 28.22                                                   |
| 2021-22                     | 12                                                        | 19.98                                                   |
| 2022-23                     | 9                                                         | 17.95                                                   |
| 2023-24 (till January 2024) | 20                                                        | 33.65                                                   |

The  SEBI  has  also  informed  the  amount  of  penalty  collected  by  stock exchanges for listed entities not appointing at least one woman director as below:

| Financial Year              | Number of listed entities   | Amount of penalty collected (in Rs. lacs)   | Number of listed entities   | Amount of penalty collected (in Rs. lacs)   |
|-----------------------------|-----------------------------|---------------------------------------------|-----------------------------|---------------------------------------------|
|                             | NSE                         | NSE                                         | BSE                         | BSE                                         |
| FY 2018-19                  | 20                          | 77.16                                       | 40                          | 191.61                                      |
| FY 2019-20                  | 47                          | 106.00                                      | 64                          | 481.71                                      |
| FY 2020-21                  | 41                          | 67.20                                       | 57                          | 506.08                                      |
| FY 2021-22                  | 40                          | 31.04                                       | 62                          | 431.98                                      |
| FY 2022-23                  | 21                          | 28.95                                       | 24                          | 392.68                                      |
| FY 2023-24 (till September) | 16                          | 1.96                                        | 20                          | 280.28                                      |

Further  Companies  Act  2013  and  the  rules  framed  thereunder  provide  for appointment  of  directors,  including  woman  directors  and  the  duties  of directors  have  been  prescribed  therein.  All  directors,  including  woman directors  are  expected  to  fully  participate  in  Board  meetings.  In  case  any director absents from all Board Meetings held during a period of 12 months, the office of director stands vacated under Section 167(1)(b).

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