In a significant step toward promoting safer and more inclusive workplaces, the Ministry of Corporate Affairs (MCA) has introduced a key compliance requirement under the Companies (Accounts) Second Amendment Rules, 2025 – with effect from July 14, 2025, notified on May 30, 2025. The amendment mandates that companies disclose detailed information related to compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act).
This regulatory update signals a shift in corporate reporting standards and aligns Indian companies more closely with international ESG (Environmental, Social, Governance) benchmarks, particularly around workplace safety and gender equity.
What has the MCA changed in 2025 regarding POSH?
Through the Companies (Accounts) Second Amendment Rules, 2025, the MCA has mandated that companies include detailed disclosures on their compliance with the POSH Act in the Board’s Report, as required under Section 134 of the Companies Act, 2013, and Rule 8 of the Companies (Accounts) Rules, 2014.
Previously, many companies confined POSH compliance reporting to a brief, one-line statement. This amendment signals a shift away from token disclosures towards substantive, transparent reporting aimed at fostering genuine accountability in preventing and addressing workplace harassment.
Why is moving beyond symbolic POSH compliance toward open and transparent reporting so important?
The amendment replaces vague, one-line POSH confirmations with detailed, data-driven disclosures to promote accountability, strengthen Internal Committees, and enhance transparency. It aligns India’s corporate reporting with global ESG and investor expectations for gender-safe workplaces, following the lead of companies like Microsoft, Salesforce, and Tata Steel.
Which companies are required to comply?
What must be disclosed in the Board Report?
Every eligible company is now required to disclose specific data points in its Board Report under Section 134 of the Companies Act, 2013. These include the total number of sexual harassment complaints received during the financial year, the number of complaints resolved, and the number of cases that remained unresolved for more than 90 days. Additionally, as part of the prescribed Board Report extract form under the 2025 amendment, companies must report the gender composition of their workforce, providing a breakdown of the number of women, men, and transgender individuals employed as of the financial year-end. These disclosures are intended to give shareholders, regulators, and the public a transparent view of how effectively the company addresses workplace harassment and how inclusive its employment environment truly is.
What is the legal basis for these disclosures?
These disclosure requirements are grounded in multiple legal provisions. Section 21 of the POSH Act mandates Internal Committees (IC) to submit annual reports, while Section 22 authorizes the appropriate government to request information and statistics from employers regarding POSH implementation, including data on Internal Committees—though it does not specifically require this information to be included in annual corporate filings.
Additionally, Rule 14 of the POSH Rules, 2013 prescribes the format and content for IC reports, and Section 134(8) of the Companies Act, 2013 provides penalties in cases of omissions or inaccuracies in the Board’s Report. Together, these provisions establish a dual compliance framework—under both labor and corporate law—to reinforce transparency and accountability in addressing workplace harassment.
What are the penalties for non-compliance?
Non-compliance with the mandated disclosure obligations may lead to penalties under the provisions of both the POSH Act and the Companies Act.
Under Companies Act, 2013 (Section 134(8)):
• Company may be fined up to ₹3,00,000 ($3,600 USD)
• Each responsible officer may be fined up to ₹50,000 ($600 USD)
This elevates workplace harassment reporting to the same level of legal seriousness as financial misreporting.
Will these disclosure rules impact a company’s investor perception or brand reputation?
Yes, the impact is considerable. Since Board Reports are publicly available, enhanced POSH-related disclosures can strengthen a company’s ESG credentials, boosting investor confidence—especially among funds that focus on environmental, social, and governance (ESG) criteria. These disclosures also improve employer branding in competitive talent markets. Notably, indices like the MSCI India ESG Leaders Index now assess companies based in part on their transparency around workplace equity. Inadequate reporting in this area can hinder fundraising efforts, reduce valuations, and damage public perception.
Is forming an Internal Committee (IC) alone enough for compliance?
Simply forming an Internal Committee (IC) does not suffice to meet compliance requirements. True adherence to the POSH Act requires that the IC convene regularly, maintain thorough documentation, include an external member as mandated by law, and resolve complaints within the prescribed 90-day timeline. IC members must also be trained in handling grievance procedures. Many forward-thinking companies go beyond minimum requirements by implementing anonymous reporting channels, conducting third-party compliance audits, and holding regular POSH awareness programs. These initiatives not only meet legal standards but also foster a workplace culture grounded in trust, safety, and respect.
How does the SHe-Box platform contribute to ensuring POSH compliance?
SHe-Box (Sexual Harassment electronic Box) is an initiative by the Government of India that provides an online platform for women employees; both in the public and private sectors to file complaints related to workplace sexual harassment. Once a complaint is submitted, it is routed to the appropriate employer or authority for redressal. While private sector companies are not legally mandated to register their IC details on the platform, doing so is considered good practice and can help demonstrate transparency and responsiveness. SHe-Box also aids government bodies in tracking complaint redressal timelines, particularly for public institutions, thereby contributing to centralized oversight and smoother regulatory review processes.
What is the MCA ultimately hoping to achieve?
The MCA’s goal is to bring about a genuine cultural shift in corporate India. By mandating detailed disclosures, the goal is to normalize the reporting of workplace harassment, free from fear or stigma, while encouraging transparent, data-driven gender policies and inclusive leadership over hierarchical or patriarchal norms. Leading organizations such as Infosys, Hindustan Unilever, and Accenture are already advancing this change through gender equity councils, ESG audits, and flexible work models. These reforms are not only ethically imperative but also deliver a competitive edge in the global business landscape.
Conclusion
The MCA’s new disclosure requirements are more than a legal mandate. They reflect a vision for ethical, inclusive, and forward-thinking corporate culture. Organizations that integrate POSH compliance and gender equity into their compliance framework not only protect their workforce but also enhance their governance reputation, investment profile, and long-term sustainability.
