In a significant move to promote workplace safety and corporate accountability, the Ministry of Corporate Affairs (MCA) had notified the Companies (Accounts) Second Amendment Rules, 2025 via Notification No. G.S.R. 357(E) dated May 30, 2025.1
This Amendment, which shall come into force from July 14, 2025 mandates companies to furnish specific disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 commonly known as the POSH Act in their annual filings.
Mandatory Disclosure on Sexual Harassment Complaints
The key highlight of this Amendment is the mandatory disclosure on sexual harassment complaints.
That means, in accordance with the provision of Section 134 of the Companies Act 2013 read with the revised Rule Section 8(5) (A) of the Companies (Accounts) Rules, 2014, companies are now required to provide a statement that "the Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" along with the following detailed disclosures in their Board Report which shall include:
- Number of sexual harassment complaints received in the year;
- Number of complaints disposed of during the year;
- Number of cases pending for more than 90 days
A concise comparison of the earlier guidelines and the new Amendment:
|
table |
||
|
Aspect |
Earlier Guidelines |
New Amendment |
|
Sexual Harassment Disclosures |
Companies only needed to confirm the constitution of an Internal Complaints Committee (ICC) |
Mandatory disclosure of the number and status of sexual harassment complaints received and resolved |
|
Regulatory Approach |
General confirmation without detailed disclosures |
More rigorous reporting, pushing for stricter enforcement and oversight. |
Consequences of Non-Compliance:
Non- compliance of Section 134(3) of the Companies Act read with rule 8(5) of the of corporate (Accounts) Rules 2014, attracts the penalty mentioned under section 134(8) of the Companies Act, 2013 i.e.:
"If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees".2
In the case of Ceeta Industries, dated- September 12, 2023 , the Ministry of Corporate Affairs, through Gazette Notification No. F No. ROC(B)/Adj Order/454-134(3)/CEETA /Co.No.21494/2023, imposed penalties for non-disclosure of the constitution of an Internal Committee in the Board Report for the financial year 2019-20, as mandated under Section 134(8):3
The penalties imposed were:
- Company Fine: ₹3,00,000
- Managing Director, CFO, Company Secretary (Officers in Default): ₹50,000 each
However, Section 446B of the Companies Act, 2013 provides certain relief for specific categories of companies, including One Person Companies, Small Companies and Startups. In cases of non-compliance by such entities or their officers, the penalty is reduced to half the standard penalty, subject to the following limits:
- Company Maximum Penalty: ₹2,00,000
- Officer in Default Maximum Penalty: ₹1,00,000
Conclusion:
The MCA's latest notification serves as a reminder that compliance with POSH Act is not just an ethical obligation but also a statutory requirement.
Hence, Companies should now proactively review and strengthen their internal processes to ensure that they are strictly in compliance with the POSH Act before July 14, 2025 in order to avoid any legal repercussions in future.
Footnotes
2 Section 134(8) of the Companies Act- If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
3 https://www.mca.gov.in/bin/dms/getdocument?mds=J4udAZEP%252FVcV74EQ2RlSTQ%253D%253D&type=open
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