Impact
of Non-Compliance with the requirement of Clause 49 (II) (A) (1) of Listing
Agreement, Section 149 of Companies Act, 2013 and Companies (Appointment
and Qualification of Directors) Rules, 2014 on Appointment of Woman Director
By
CS A MOHAN KUMAR//CS
D HEM SENTHIL RAJ//CS K VINOTH
As Per Clause 49 (II) (A) (1) of
the Listing agreement, every Listed Company is required to appoint a Woman
Director. The initial time period given
was 1st October, 2014.
Securities
Exchange Board of India
(SEBI) vide its circular dated 15th September, 2014 extended the
timeline for appointment of Woman Director in the Board of Listed Entity from
01st October, 2014 to 31st March, 2015.
After
the said timeline is over, SEBI
has now issued a circular dated 08th
April, 2015 directing the Stock Exchanges to impose fine for non-compliance
with the Clause 49 (II) (A) (1) of Listing Agreement to the Listed entity.
Fine
Structure Issued By SEBI:
Listed
Entity Appointing Woman Director Between 1st April, 2015
and 30th June, 2015
|
Rs.50,000/-
|
Listed
Entity Appointing Woman Director Between 1st July, 2015
and 30th September, 2015
|
Rs.50,000/- (Plus)
Rs.1,000/- Per Day
(w.e.f 1st
July, 2015 till the date of compliance up to 30th September, 2015)
|
Listed Entity Appointing
Woman Director on or after 1st October, 2015
|
Rs.
1,42,000/- (Plus)
Rs.
5,000/- Per Day
(w.e.f
1st October, 2015 till the date of compliance)
SEBI may initiate any other
action against the :
Non-Compliant Entities,
Promoters and/or Directors or
Issue directions in accordance
with law, as considered appropriate in addition to the fine imposed.
|
Companies
Act, 2013:
As per Section 149 of Companies
Act, 2013 and The Companies (Appointment and Qualification of Directors) Rules,
2014 every listed companies is required to appoint a Woman Director with in 1
year from the date of commencement of Act; this provision came into effect from
1st April, 2014 and as per Companies Act also, Companies are
required to appoint Woman Director on or before 31st March, 2015.
However, Section 149 of the
Companies Act, 2013 does not provide any specific penalty or fines for
non-compliance of particular Section.
Whenever there is no specific
penalty or punishment for non-compliances of any provisions are not available
in the particular section of Companies Act, 2013, penalty may be levied for
such non-compliances as per the Provisions of Section 450 of the Companies Act,
2013. If such a legal action is taken against the erring Companies, they may
have to seek for Compounding.
Penalty
as Per Section 450 of Companies Act, 2013:
Fine Up to – Rs. 10,000/-
Where contravention is continuing
one, further fine which may extend to Rs.1,000/-
for every day after the first during which contravention continues.
Penalty
for Erring Listed Companies:
In our view, the Listing Entities
which have not appointed Woman Directors are required to pay fines as per the
circular issued by the SEBI in complying with the Listing Agreement ; But will they be required to pay penalty as per the provisions of Section 450 by the competent authorities under Companies Act also ? In other words, when Stock Exchange imposes a penalty, can MCA also levy another penalty for the same offence?
However
we feel that for the same offence, Companies may not be punished twice & there may not be any penalty from MCA for Listed Companies.
Penalty
for Erring unlisted Companies:
Appointment of Woman Director is
applicable for a certain specified Public Limited as below:
Public limited company having
i. Paid up share
capital of 100 Crore or
ii. Turnover of 300 Crore or more
The Public Companies falling
under the above category are also required to comply with the provisions of
Companies Act and should have appointed a Woman Director on or before 31st
March 2015 (within one year from the commencement of the Act). We need to see
what action will be initiated against such unlisted Public Companies for Non
compliance.
Point to
Ponder:
Whether
the listed entity are required to pay fine separately to all the Stock
Exchanges where the Share are listed?
As per the Circular issued by
SEBI, it has directed all the stock exchanges to impose the fines to the listed
entity, which has not complied with the provisions of Clause 46 (II)(A)(1) of
Listing Agreement. The Circular does not
provide any clarity relating to payment of fines; i.e. whether the fine needs
to be paid to each of the Stock Exchanges where the shares are listed. This
point requires clarification from Stock Exchange or SEBI.
By
CS A MOHAN KUMAR
CS K VINOTH
CS D HEM SENTHIL RAJ
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