Earlier under Companies Act, 1956 there was no such provision under which appointment of woman has been made compulsory for Companies but with the introduction of The Companies Act, 2013, a sub-section and rule related to the mandatory appointment of Woman Director in the Board of Directors has been inserted. This not only empowers women but also gives an equal opportunity to the woman who holds such a qualification.
The concept of Women Directors and Independent Directors was introduced through the Companies Act, 2013. Section 149 of the Companies Act, 2013 and the Companies (Appointment and Qualifications of Directors) Rules, 2014 deal with the provisions pertaining to the directors on board of a company.
For the appointment of Women Director, paid-up share capital or turnover, as the case may be, as on the last date of the latest audited financial statements has to be taken into account.
Rule 3 of Companies (Appointment and Qualifications of Directors) Rules, 2014 deals with Woman Director in detail, and it also prescribes the class of companies as referred to in Section 149 of the Act on which this provision is applicable. The said rule lays down the following:
- The class of companies for which appointment of woman director is mandatory:
- Every listed company;
- Every other public company having: a) paid-up share capital of one hundred crore rupees or more; or b) turnover of three hundred crore rupees or more. The paid-up share capital or turnover, as the case may be, as on the last date of the latest audited financial statements shall be taken into account.
- A time period is given to the company for compliance with the provision. When the provision of appointment of woman director is applicable to the company, the company shall comply with such provisions within a period of six months from the date of its incorporation.
- Intermittent Vacancy of a Woman Director: Any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than:
- Immediate next Board meeting; or
- Three months from the date of such vacancy.
Further, a Woman Director can be an executive director or a non-executive director. A woman director can hold the position of a director until the next Annual General Meeting from the date of appointment. She is also entitled to seek reappointment at the general meeting. It is pertinent to note that the tenure of a woman director is liable to retirement by rotation (Sub-section 6 of Section 152) similar to other types of directors.
Duties and Liabilities
- The following duties and liabilities have been imposed on the directors of companies, by the Companies Act of 2013: —
- A director of a company shall act in accordance with the Articles of Association (AOA) of the company.
- A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company.
- A director of a company shall exercise the duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
- A director of a company shall not involve in a situation in which she may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
- A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to herself or to her relatives, partners, or associates and if such director is found guilty of making any undue gain, she shall be liable to pay an amount equal to that gain to the company.
- A director of a company shall not assign her office and any assignment so made shall be void.
- If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than Rs.1,00,000/- but which may extend to Rs.5,00,000/-.
- Qualification / Industry Experience
The Companies Act, 2013 does not prescribe any qualifications or minimum industry experience criteria for candidature as Women Director of any applicable company.
Essential requirements for the appointment of Woman Director
- Digital Signature Certificate in Class II or Class III as per the Information Technology Act Act, 2000
- Application in the Form DIR-3 pursuant to Section 153 of The Companies Act, 2013 & Rule 9(1) of The Companies (Appointment and Qualification of Directors) Rules, 2014 for allotment of Director Identification Number (DIN)
- Consent in the form of Form DIR-2 pursuant to Rule 8 of the Companies (Appointment & Qualification of Directors) Rules 2014
- Intimation in Form DIR- 8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014 to the effect that she is not disqualified under sub-section (2) of Section 164 of the Companies Act, 2013
- MBP- 1 in terms of Companies (Meetings of Board and its Powers) Rules, 2014
- DIR- 12 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014
Thus the Government has now empowered women to participate as one of the Board Members of the company. This step towards gender discrimination is welcomed by many leading companies some of which appointment Woman Director immediately on commencement of Companies Act, 2013.