Notified on May 30, 2025, the Ministry of Corporate Affairs (“MCA”) has taken a significant stride towards strengthening corporate governance and social accountability in India with the issuance of the Companies (Accounts) Second Amendment Rules, 2025 (“Amendment Rules”) which will come into effect from July 14, 2025.
These crucial amendments have introduced new disclosure requirements for listed companies and other public companies with a paid-up share capital of INR 25 crore or more.
Key Disclosure Requirements:
These Amendment Rules mandate specific, detailed disclosures within the board of directors’ report, focusing on two critical areas of employee welfare and workplace safety:
- Maternity Benefit Act Compliance: Companies are now explicitly required to include a statement in their board report confirming comprehensive compliance with the provisions of the Maternity Benefit Act, 1961. This is a direct affirmation that the company adheres to all statutory requirements concerning maternity leave, medical benefits, and other entitlements for its female employees. This disclosure reinforces the legal obligation to create a supportive environment for women in the workforce, ensuring they receive their due benefits without discrimination.
- Enhanced POSH Act Disclosures: Fostering a Safe and Accountable Workplace: The Companies (Accounts) Rules, 2014, had already mandated a disclosure confirming the constitution of an Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”). However, the Amendment Rules significantly expand upon this by requiring the inclusion of the following crucial data in the board report.
- Number of sexual harassment complaints received during the year – This quantitative disclosure provides a clear picture of the reported instances of sexual harassment within the organization, promoting transparency;
- Number of complaints resolved during the year – This metric demonstrates the effectiveness and efficiency of the ICC in addressing and resolving complaints, indicating the company’s commitment to swift action; and
- Number of cases pending for more than ninety days – This particular disclosure is a vital indicator of potential delays or systemic issues in the redressal mechanism. It aims to highlight any backlog or lack of timely resolution, putting pressure on companies to ensure cases are dealt with expeditiously.
These enhanced POSH disclosures underscore the MCA’s dedication to creating safer workplaces and fostering a culture of accountability regarding sexual harassment.
Companies must proactively adapt their systems and processes to meet these new requirements, the government is not merely reiterating existing legal obligations but actively elevating their importance within the corporate governance landscape.