At a glance
- The Companies (Accounts) Second Amendment Rules 2025 (Amendment Rules), effective 14 July, mandate detailed Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (POSH Act) compliance disclosures in Board Reports, including complaint statistics and workforce gender composition.
- Companies must now report the number of sexual harassment complaints received, resolved, and pending over 90 days, along with counts of female, male, and transgender employees.
- Affirmation of compliance with the Maternity Benefit Act 1961 is also required, reinforcing workplace inclusivity and employee welfare.
- Non-compliance may lead to significant penalties, including fines up to INR3,00,000 and potential business license cancellation for repeated violations.
- These changes aim to boost transparency and accountability, urging companies to strengthen internal committees, improve complaint handling, and promote inclusive workplace practices.
In a significant move to enhance corporate accountability and workplace safety, the Ministry of Corporate Affairs has introduced the Amendment Rules. These amendments, effective from 14 July 2025, mark a notable shift in how companies are required to report compliance with the POSH Act.
Previously, companies were only required to include a brief affirmation in their annual Board Reports confirming the constitution of an Internal Committee (IC) under the POSH Act. However, under the new rules, this requirement has been significantly expanded. Companies must now provide detailed disclosures, including the number of sexual harassment complaints received during the year, the number of complaints resolved, and the number of cases that remained pending for more than 90 days. Additionally, companies are required to report the gender composition of their workforce, specifically the number of female, male, and transgender employees as of the end of the financial year.
These changes align with existing obligations under Sections 21 and 22 of the POSH Act and Rule 14 of the POSH Rules, which already require ICs to submit annual reports to employers. However, by mandating that this information be included in publicly available Board Reports, the Amendment Rules significantly increase transparency and stakeholder visibility into a company’s compliance practices.
Importantly, the amendments also require companies to affirm compliance with the Maternity Benefit Act 1961, further reinforcing the government’s focus on workplace inclusivity and employee welfare.
The implications of non-compliance are serious. Under the POSH Act, failure to report the required data can result in fines ranging from INR50,000 to INR1,00,000, with repeated violations potentially leading to the cancellation or non-renewal of business licenses. Additionally, under Section 134(8) of the Companies Act, companies and their officers may face penalties of up to INR3,00,000 and INR50,000 respectively for failing to meet disclosure obligations.
These developments underscore the need for companies to move beyond mere formal compliance. Organisations must ensure that their ICs are not only properly constituted but also accessible, independent, and effective in handling complaints. Accurate record-keeping, timely resolution of cases, and regular training and awareness programs are now more critical than ever.
Moreover, the requirement to disclose gender diversity statistics may influence public perception and investor confidence, encouraging companies to foster more inclusive workplaces.
In conclusion, the Amendment Rules represent a meaningful step toward embedding a culture of transparency and accountability in corporate India. Companies are advised to review their current POSH compliance frameworks, update their internal policies and reporting mechanisms, and ensure that their board reports reflect the new disclosure requirements in both letter and spirit.
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