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”). Notified on May 30, 2025, these crucial amendments to the Companies (Accounts) Rules, 2014 (“Rules”) have introduced new disclosure requirements for listed companies and other public companies with a paid-up share capital of INR 25 crore or more. The said Amendment Rules will come into effect from July 14, 2025.

Unpacking the Key Disclosure Requirements:

The core of these Amendment Rules lies in mandating specific, detailed disclosures within the board of directors’ report, focusing on two critical areas of employee welfare and workplace safety:

1. 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.
2. Enhanced POSH Act Disclosures: Fostering a Safe and Accountable Workplace: The Companies (Accounts) Rules, 2014, 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.
   1. 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;
   2. 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
   3. 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.

Beyond the Text: Implications and Broader Context:

The MCA’s decision to mandate these disclosures under the Companies Act, 2013, even though the requirements are already present in the respective social welfare acts (Section 20 of the Maternity Benefit Act and Section 22 of the POSH Act), holds significant implications:

1. Increased Scrutiny and Accountability: By bringing these disclosures under the Companies Act, the MCA integrates social compliance directly into the corporate financial reporting framework. This means non-compliance with these disclosure requirements could attract consequences under the Companies Act, making it a more serious corporate governance matter. It also subjects these disclosures to the scrutiny of auditors and other stakeholders.
2. Promoting ESG Principles: These amendments align with the growing global emphasis on Environmental, Social, and Governance (ESG) criteria. By mandating disclosures related to social aspects like maternity benefits and workplace safety, India is signalling its commitment to incorporating social considerations into corporate performance evaluations. This could make Indian companies more attractive to ESG-conscious investors.
3. Digitalization and Data-Driven Oversight: The MCA has also been pushing for greater digitalization in corporate filings. Alongside these disclosure enhancements, the Amendment Rules have also introduced new e-Forms for submitting extracts of the Board Report, Auditor’s Report (Standalone), and Auditor’s Report (Consolidated). This shift to machine-readable data will enable better regulatory oversight and analysis, making it easier for authorities to track compliance trends.
4. Operational Challenges for Companies: Companies will need to strengthen their internal data collection and reporting mechanisms to accurately capture and report the newly mandated information. This may involve upgrading HR systems, training personnel on data management for these specific disclosures, and ensuring robust internal controls to guarantee the accuracy and completeness of the reported data.
5. Enhanced Stakeholder Confidence: Transparent reporting on social compliance builds trust with various stakeholders, including employees, investors, customers, and the general public. A company that demonstrates its commitment to employee well-being and a safe workplace can enhance its brand reputation and attract and retain talent.

Conclusion:

The Amendment Rules represent a progressive step by the MCA. By embedding these vital social compliance disclosures within the Companies Act, the government is not merely reiterating existing legal obligations but actively elevating their importance within the corporate governance landscape. This move will undoubtedly push companies towards greater transparency, accountability, and a more robust commitment to fostering equitable and safe working environments for all, ultimately contributing to a more responsible and sustainable corporate sector in India. Companies must proactively adapt their systems and processes to meet these new requirements, ensuring not only compliance but also leveraging these disclosures to enhance their overall corporate reputation and stakeholder confidence.

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