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It is said that action speaks louder than words. The Indian government has shown true initiative in the same manner, through their monumental amendment to the Companies (Accounts) Rules, 2014, which makes it mandatory to provide full disclosure of an organization’s legal compliance of any and all incidents of sexual harassment of women in the workplace and the steps taken to combat them.

What is Companies (Accounts) Rules, 2014?

The Companies (Accounts) Rules came into existence on 31st March, 2014. It is an all encompassing set of corporate laws that define the many different aspects of company governance in a binding article by the Ministry of Corporate Affairs.

From maintaining record books to declaring yearly financial statements and everything in between, is covered under the Companies (Accounts) Rules, 2014. There are amendments made to the rules nearly every year, the latest of which was the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act

Two years of tireless efforts on the Indian government’s part lead to the much needed amendment on 31st July, 2018. Most company compliance lawyers are already rushing to implement the actions necessary for compliance. Here’s what you need to know:

• A previous, 2013 amendment to the same act had made it compulsory for companies to maintain an internal complaints committee (ICC) that monitors for sexual harassment complaints and takes action on them accordingly.
• This 2018 amendment was made to Rule 8, which means all incidents need to be chronicled in the Board of Directors’ Report. The report is filed annually by any registered company in India.
• Reports on sexual harassment incidents will need to contain details of the incident, actions taken for resolutions and actions taken to ensure such an incident isn’t repeated again.

Failure to Comply

Failure to provide complete disclosure of legal compliance can result in heavy penalties and imprisonment in the following manner:

• Fines of between Rs 50,000 - Rs 25 lakhs, imposed upon the company.
• Imprisonment of every officer in the company for up to 3 years.
• Individual fines of between Rs 50,000 - Rs 5 lakhs for every officer in the company.

Exception to the Rule

The only exception to this corporate law is for one-person companies and small companies - with less than 10 people in employ.

For more information on legal compliance, get in touch with Lawyered and choose from some of the leading company compliances lawyers in India! Get Lawyered here!