Effective 14 July 2025, companies are required under the Companies (Accounts) Rules 2014 to provide detailed disclosures on their compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). This signals a shift towards meaningful and transparent reporting practices that promote genuine accountability in the prevention and redressal of workplace sexual harassment.
Amendments to Companies (Accounts) Rules, 2014
On 30 May 2025, the Ministry of Corporate Affairs (MCA) introduced the Companies (Accounts) Second Amendment Rules, 2025. The amendments to the Companies (Accounts) Rules, 2014, which are effective from 14 July 2025 onwards, require companies to make detailed disclosures on their compliance with the POSH Act in the Board's Report.
Under the amended Rules, companies are required to include in the Board's Report detailed information on:
- the total number of sexual harassment complaints received during the relevant financial year;
- the number of complaints resolved;
- the number of cases that remained unresolved for over 90 days; and
- the gender composition of employees employed by the company as of financial year-end (ie, number of women, men, and transgender employees).
These mandatory disclosure requirements apply to all companies who are required to submit a Board Report under Section 134 of the Companies Act, 2013 (Companies Act). Companies who are not required under the POSH Act to constitute an Internal Complaints Committee (ICC) (ie, companies with less than 10 employees) are still expected to make a general disclosure on their compliance with the POSH Act.
Significance of the Amendments
Although the POSH Act has been in force since 2013, enforcement has historically been uneven, with many companies failing to establish ICCs or file annual reports. By embedding POSH compliance into the Companies (Accounts) Rules, the MCA has elevated workplace sexual harassment to a matter of corporate governance and public accountability.
Companies that fail to comply with the mandated disclosure requirements may face penalties in accordance with the POSH Act and/or the Companies Act, which range from monetary fines for the company and its responsible officers, to cancellation or non-renewal of licenses.
Key Takeaways
The amendments to the Companies (Accounts) Rules, 2014 mark a pivotal shift in how workplace sexual harassment is regulated and reported in India. By mandating companies to make detailed disclosures on their compliance with the POSH Act, the MCA has sent a clear message: safeguarding female employees from workplace sexual harassment is not just a legal obligation, but a cornerstone of responsible corporate conduct.
Employers should review and assess their overall compliance with POSH obligations, and ensure that proper documents and records are kept, so as to ensure compliance with the new mandatory disclosure requirements.
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