Employment Law June 2025
Corporate Governance Strengthened by Mandatory POSH Disclosures under New Company Law Amendments
The Ministry of Corporate Affairs (MCA), Government of India, through its notification dated May 30, 2025, has introduced the Companies (Accounts) Second Amendment Rules, 2025 (“Amendment Rules”). These rules amend Rule 8(5)(x) of the Companies (Accounts) Rules, 2014, and significantly enhance disclosure obligations related to compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”). These amendments will come into effect from July 14, 2025, marking a pivotal step in reinforcing corporate governance, accountability, and workplace safety in India.
Background and Scope of the Amendments
Earlier, Rule 8(5)(x) required companies to include in their annual Board Report only a brief statement confirming the constitution of an Internal Committee (IC) under the POSH Act. The Amendment Rules now impose additional, more detailed disclosures, including:
- Total number of sexual harassment complaints received during the financial year
- Number of complaints resolved within the year
- Number of complaints pending resolution for more than 90 days
Furthermore, the updated reporting format requires disclosure of the gender-wise breakup of employees (female, male, and transgender) as of the financial year-end. These additions appear to align closely with the disclosure norms under the POSH Act and POSH Rules, 2013, and reinforce the push toward a transparent workplace culture. Notably, the Amendment Rules also require a statement in the Board Report confirming compliance with the Maternity Benefit Act, 1961.
Relevant Statutory Framework and Non-Compliance Consequences
The enhanced disclosures under the Amendment Rules are grounded in Sections 21 and 22 of the POSH Act and Rule 14 of the POSH Rules. As per Section 21, the Internal Committee must annually report to the employer the following:
- Complaints received and disposed of during the year
- Complaints pending beyond 90 days
- Workshops or awareness sessions conducted
- Nature of actions taken in response
Section 22 obligates the employer to include the above data in the annual report, or if no report is published, to inform the District Officer.
With the new MCA Amendment Rules in place, failure to comply with these reporting requirements could result in penalties under both the POSH Act and the Companies Act, 2013. Specifically:
- Under the POSH Act, non-compliance could attract fines ranging between ₹50,000 and ₹1,00,000, and repeated violations may lead to cancellation or non-renewal of licenses.
- Under Section 134(8) of the Companies Act, the company may face penalties up to ₹3,00,000, with an additional fine of ₹50,000 for each officer responsible for the non-compliance.
Conclusion: A Shift Toward Meaningful Workplace Reform
The Companies (Accounts) Second Amendment Rules, 2025, represent a substantial step toward institutionalizing accountability and safety in workplaces. By mandating quantifiable disclosures instead of mere declarations, the Ministry has emphasized the necessity of transparent and inclusive workplace practices.
These public disclosures in Board Reports provide enhanced visibility into a company’s POSH compliance, encouraging stronger redressal mechanisms and supporting stakeholders in assessing a company’s commitment to employee welfare. The inclusion of gender-specific workforce data further promotes inclusivity and may enhance public perception of a company’s cultural values.
Additionally, the MCA’s efforts complement ongoing initiatives by local authorities encouraging organizations to register their ICs on the SHe-Box portal, thereby streamlining national-level monitoring of workplace harassment complaints.
However, the true test lies ahead — whether companies will treat these requirements as a genuine corporate responsibility or simply a statutory formality. It is imperative for organisations to ensure functionally independent ICs, robust policy frameworks, proper complaint resolution systems, and proactive leadership involvement to bring POSH compliance into meaningful effect.
For further guidance or legal advisory on POSH compliance, Board reporting requirements, or workplace law audits, reach out to LawBharat Associates, your trusted legal and compliance partner.
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