- INTRODUCTION
On May 30, 2025, the Ministry of Corporate Affairs ("MCA") notified the Companies (Accounts) Second Amendment Rules, 2025 ("Amended Rules"), which significantly modified corporate disclosure obligations under the Companies (Accounts) Rules, 20141. Effective July 14, 2025, the Amended Rules apply to all companies under the Companies Act, 2013 ("Companies Act"), whether public, private, listed, or unlisted.
From an employment-relations perspective, the Amended Rules integrate workplace compliance into the corporate governance framework, particularly regarding gender-sensitive policies, which employers must comply with. The Amended Rules now require companies to publicly disclose information about workplace sexual harassment complaints and confirm compliance with maternity benefit laws, making workplace labour compliance an essential part of corporate reporting.
This article outlines the key legal changes, practical implications, and steps that companies must take to ensure compliance.
- LEGAL FRAMEWORK
2.1. Previous Legal Position2
Companies were previously required to make a limited statement in their Board Report confirming compliance under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"). They were not required to disclose quantitative data on workplace sexual harassment complaints or their resolution. There was no requirement to report compliance with the Maternity Benefit Act, 1961 ("MB Act"), or to disclose gender-wise employee statistics in corporate filings.
2.2. New Framework under the Amended Rules3
- Workplace Sexual Harassment Disclosures - Companies must now disclose the following quantitative information about workplace sexual harassment complaints in their Board Reports: (i) the total number of workplace sexual harassment complaints received during the financial year; (ii) the number of cases that were successfully resolved during the same period; and (iii) the number of cases that remain pending beyond the 90-day statutory timeline under the POSH Act for complaints resolution.4 The disclosure obligations apply even when there are no reported complaints.
- Maternity Benefit Disclosures - Companies must now include a formal statement in their Board Report confirming compliance with the MB Act. This declaration includes verifying compliance with various provisions of the MB Act, including providing the mandatory 26 weeks of paid maternity leave and maintaining crèche facilities where applicable. Companies must also follow the central MB Act and applicable state-specific maternity benefit rules.
- Employee Demographic Disclosures – Companies must now disclose gender-wise employee data as of the financial year's end. This goes beyond the traditional binary gender classification by explicitly requiring companies to report the number of male, female, and transgender employees.
The new disclosures complement and reinforce existing legal requirements. The enhanced POSH Act reporting aligns with Sections 21 and 22 of the POSH Act, which require companies to maintain records of complaints and report annual statistics to designated authorities. Similarly, the MB Act compliance statement reiterates existing obligations but integrates them into the corporate governance framework. The key change is that this information will now be included in public corporate filings, making it accessible to stakeholders, investors, and the general public.
2.3. Penalty Framework
Companies now face a possible dual penalty structure for non-compliance. Under the POSH Act, the penalties range from INR 50,000 to INR 1,00,000.5 Under the Companies Act, failure to make the required Board Report disclosure will result in fines up to INR 3,00,000 for the company and up to INR 50,000 per defaulting officer.6 Repeated violations under the POSH Act may result in more severe consequences, including license suspension or cancellation.7
- PRACTICAL IMPLEMENTATION CHALLENGES
The Amended Rules introduce significant operational changes for companies, particularly in managing HR functions and maintaining compliance reporting.
3.1 HR and Compliance Infrastructure
HR teams should implement comprehensive systems to track workplace sexual harassment complaints from receipt to resolution, including maintaining detailed records of Internal Committee ("IC") proceedings, investigations conducted, and documenting all actions taken, while abiding by the confidentiality and neutrality requirements under the POSH Act. Strengthened IC internal record-keeping and digital complaint management tools for real-time tracking are recommended, again bearing the confidentiality requirements in mind. Additionally, companies should conduct regular audits of maternity benefit provisions, including leave policies, crèche facilities, and other statutory requirements, especially in multi-state operations. Close coordination between legal, HR, and company secretarial teams is critical to ensure accurate and timely disclosures for the Board Reports.#
3.2 Privacy Concerns
Companies must balance disclosure requirements with employee privacy, particularly when collecting gender identity information. They must also maintain confidentiality of complaint proceedings under the POSH Act while compiling accurate data for public disclosure.
3.3 Training and Awareness
Board members, senior management, and IC members may lack familiarity with the enhanced disclosure obligations. Regular training programs will be necessary to ensure that all stakeholders understand their roles in both implementing and reporting compliance.
- STRATEGIC RECOMMENDATIONS
To effectively implement these new requirements, companies should (i) conduct a comprehensive audit of existing POSH Act and MB Act compliance; (ii) implement robust complaint tracking and case management systems; (iii) train board members and senior management on enhanced reporting obligations; (iv) review and update maternity benefit policies to align with state-specific compliances; (v) develop standardised processes for collecting and verifying gender demographic data; and (vi) establish clear protocols for maintaining confidentiality and neutrality while fulfilling disclosure obligations.
Footnotes
1 Ministry of Corporate Affairs notification dated May 30, 2025, introducing Companies (Accounts) Second Amendment Rules, 2025, effective from July 14, 2025.
2 Rule 8, Companies (Accounts) Rules, 2014.
3 Companies (Accounts) Second Amendment Rules, 2025
4 Section 11, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
5 Section 26, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
6 Section 134(8), Companies Act, 2013.
7 Section 26, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
