Applicability of Woman Director:
According to Section 149(1) of the Companies Act, 2013, certain companies are mandated to have at least one woman director on their board. Rule 3 further specifies that the following companies must appoint a woman director:
- Every listed company.
- Every other public company having:
- Paid-up share capital of Rs.100 crore or more, or
- Turnover of Rs.300 crore or more.
The appointment must be made within six months of meeting the specified criteria. The woman director’s appointment is based on the paid-up share capital or turnover as of the last date of the latest audited financial statements.
Appointment of Woman Director:
The process involves the woman director submitting consent in Form DIR-2, disclosing disqualifications in Form DIR-8, obtaining shareholders’ approval through a resolution, and filing necessary forms (MGT-14 and DIR-12) with the Registrar of Companies (ROC). The board must fill any intermittent vacancy of a woman director within three months or at the next board meeting, whichever is earlier.
Tenure of Woman Directors:
A woman director’s tenure lasts until the next Annual General Meeting (AGM) from the date of appointment, with the option for reappointment. The woman director is subject to retirement by rotation and can resign with notice to the company.
Penalty for Non-Compliance:
Section 172 of the Act prescribes a penalty of a fine between Rs.50,000 and Rs.5,00,000 for non-compliance with the appointment of a woman director.
Appointment of Independent Woman Director:
As per the SEBI LODR (Listing Obligations and Disclosure Requirements) regulations, it is mandatory for the top 500 listed entities to have at least one independent woman director starting from April 1, 2019. Similarly, for the top 1000 listed entities, this obligation extends to having at least one independent woman director since April 1, 2020. The classification of the top 500 and 1000 entities is determined based on their market capitalization at the conclusion of the immediately preceding financial year.
Applicability of Independent Directors:
Section 149(6) of the Act introduces independent directors, and Rule 4(1) states that certain companies must have at least two independent directors.
The criteria include a public company with a turnover exceeding Rs.100 crore, paid-up share capital over Rs.10 crore, or outstanding borrowings, loans, debentures, or deposits exceeding Rs.50 crore.
Appointment of Independent Directors:
The procedure involves issuing a notice of the general meeting, passing a resolution, and filing Forms MGT-14 and DIR-12 with the ROC. The board must fill any intermittent vacancy of an independent director within three months or at the next board meeting, whichever is earlier.
Exemption for Appointment of Independent Directors:
Rule 4(2) exempts certain unlisted public companies, such as joint ventures, wholly-owned subsidiaries, and dormant companies under Section 455, from appointing independent directors.
Tenure of Independent Directors:
Independent directors can be appointed for up to two consecutive terms of five years each, with the possibility of reappointment after a gap of three years. Performance evaluations by the entire board are required for reappointment.
Penalty for Non-Compliance:
Similar to the appointment of a woman director, non-compliance with appointing independent directors attracts a penalty under Section 172, ranging from Rs.50,000 to Rs.5,00,000.
