Appointing a Women as a Director in a company

The society in our county is male inclined from the very inception. Women were always seen as lower to men. But now, the time has drastically changed the thinking of society. Several laws are framed for providing security and special status to women. From many years the Central Government was providing even a special tax exemption to the women. Some schemes of Central Government are specially designed only for the betterment, protection and empowerment of the women. Here we can say that Companies Act, 2013 by second proviso to section 149(1) which is providing for the appointment of the women director is an effort for empowerment of the women in India.

Second Proviso to Section 149(1) runs as:

“Provided further that such class or classes of companies as may be prescribed, shall have at least one woman director.”

Earlier the draft rules in regard to the appointment of the Women Director were not very clear as it was providing “The listed company and all other companies which will fall under category of Rs. 100 crore Share capital or 300 crore sales shall appoint the women director within one year and three years respectively from the commencement of second proviso”. If we analyze the draft rules it clearly mentioned that government reserved arbitrary rights in its hands for the appointment of the women director when it was providing such class or classes of companies and on the other side from the commencement of second proviso.

But today as the rules got notified and enforced from 1st day of April, 2014, the position is clear, but only to a limited extent which is providing a choice for company in regard to appointment of the women director.

Section 149(1) clarifies that all the companies must have the Board of Directors, which shall consist of individuals

In case of Private Company: Minimum 2 directors;

In case of Public Company: Minimum 3 directors;

In case of One Person Company:  One director.

The Companies (Appointment & Qualification of Director) Rules, 2014 which come into force on 1st April 2014 provides the class of companies which shall appoint at least one woman director, these are-

(i) every listed company;

(ii) 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:

as on the last date of latest audited financial statements.

Proviso added to the rule is providing that a company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation

So, we can make the difference for the purpose of compliance of the provisions between companies:

Here, first category is of the companies which are incorporated under the current act, for which the proviso is providing that they are to appoint the women director with in the period of six months.

Second category is of those companies which were incorporated under the previous company laws, for those companies the period shall be one year from 1st April 2014 i.e. uptil 31st March 2015.

But the main concern here is to see whether the companies will seriously appoint deserving women director or the women director will also be coming out of the Promoter group. The provision is not clear about the independence of the women director. So, uptil when there is no restriction for the appointment of women director from the promoter group, there will be no difficulty for the promoters to appoint a women director. But, we can interpret only that this provision is a social measure so, the government will not take any step for independence of the women director.

Moreover, if the women director will be independent, it will be more beneficial for the companies because by appointing independent women director they will be complying two provisions of section 149 i.e. by appointing the women director and Independent Director.

The second proviso to the rule 3 is further providing that if there is intermittent vacancy of a woman director, it 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 whichever is later. This proviso can be analysed as essential for maintaining the post of women directors as if this provision would not have been made, the companies will be appointing a women director and after appointment will try her removal and would have overcome law. But this provision has ensured the enforcement of the appointment of Women Director in a Company.

http://www.mca.gov.in/MinistryV2/companiesact.html