Delay in Appointing Woman Director Leads to Company and Directors Facing ROC Penalty

The Registrar of Companies (ROC), Delhi, held a company liable for a penalty under the Companies Act due to its failure to appoint a woman director on time.

When a company’s paid-up share capital goes beyond the limit of Rs 100 crore or the turnover exceeds Rs 300 crore, such a company is mandatorily required to appoint at least one woman director, as per the 2nd proviso to section 143(1) r/w rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The paid-up share capital of the company, Lava International, crossed the limit of Rs 100 crore on 24.07.2017. The company appointed a woman director on 24.08.2017, but she left the company on 22.08.2023.

The company appointed another woman director on 20.05.2024, with a gap of 179 days. This was a clear violation of the 2nd proviso to Rule 3, which requires the Board to fill up the empty vacancy of a woman director in the company at the earliest, but not later than the immediate next board meeting or three months from the date of such vacancy, whichever is earlier.

Since the company failed to appoint the woman director on time, the provisions of Section 149(1) of the Companies Act, 2013, r/w Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, were violated.

Therefore, the ROC imposed a penalty of Rs 1,39,500 on the company and Rs 1,00,000 each on its six directors. The penalty was directed to be paid within 90 days using the ‘e-Adjudication’ facility.