Article submitted by Swetha Dasu, Associate
INTRODUCTION
On 30 May 2025, the Ministry of Corporate Affairs (MCA) notified the Companies (Accounts) Second Amendment Rules, 2025, ushering in a pivotal shift in corporate reporting practices. Effective from 14 July 2025, these rules significantly expand the disclosure requirements in the Board’s Report under Rule 8 of the Companies (Accounts) Rules, 2014. Two notable additions pertain to mandatory disclosures concerning:
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act), and
- The Maternity Benefit Act, 1961.
This regulatory move signals a clear intention to promote gender-inclusive governance by embedding accountability and transparency directly into corporate disclosure obligations.
LEGAL FRAMEWORK BEFORE AMENDMENT
Sexual Harassment Disclosures
Previously, Rule 8(5)(x) of Companies (Accounts) Rules, 2014 merely required a statement confirming the constitution of an Internal Complaints Committee (ICC) as per the POSH Act. There was no requirement to disclose actual data on complaints filed, resolved, or pending limiting insights into how earnestly companies were addressing workplace harassment.
Maternity Benefit Reporting
Until this amendment, there were no explicit provisions under the Companies Act 2013, or related rules requiring disclosures about compliance with the Maternity Benefit Act, 1961. While enforcement existed under labour law, corporate reporting remained silent on whether employers were extending benefits such as maternity leave, nursing breaks, or crèche facilities.
KEY CHANGES INTRODUCED BY THE 2025 AMENDMENT
- Substitution of Rule 8(5)(x): Strengthened POSH Reporting
The Companies (Accounts) Second Amendment Rules, 2025 replace the previous Rule 8(5)(x) of the Companies (Accounts) Rules, 2014. The amended rule now requires companies to include the following in their Board’s Report:
- Number of sexual harassment complaints received during the financial year
- Number of complaints resolved within the same period
- Number of cases pending beyond 90 days
This addition makes reporting of company compliance in terms of Rule 7(1) of the POSH Rules, 2013, so that ICCs are required to conduct their inquiry within ninety days. Inclusion of details regarding complaints pending for over this legislative period enables stakeholders to review if companies are complying with stipulated procedural checks and deadlines.
2. Inclusion of Rule 8(5)(xiii): Maternity Compliance Disclosure
The amendment also introduces a new provision, Rule 8(5)(xiii), and this involves a declaration to be presented in the Board’s Report on compliance with the provisions of the Maternity Benefit Act, 1961. The companies are now required to make a declaration that they have made maternity benefits effective and must cover:
- Paid maternity leaves up to 26 weeks for eligible employees
- Nursing breaks for mothers
- Availability of crèche facilities for establishments with 50 or more employees
- Protection against dismissal during maternity leave
By mandating these declarations, the MCA effectively brings statutory employee welfare rights into the realm of corporate governance.
PROCEDURAL ENHANCEMENTS: DIGITAL TRANSITION
Beyond expanding content of disclosures, the 2025 amendment promotes ease of compliance through digitisation. Traditional paper-based forms like AOC-1 and AOC-2 have been replaced with e-forms. Additionally, updates have been made to several other e-forms including AOC-4, AOC-4 CFS, AOC-4 NBFC (Ind AS), and CSR-2, making reporting more streamlined and efficient.
PENALTIES FOR NON-COMPLIANCE
Failure to adhere to these enhanced disclosure norms may attract penalties under Section 134(8) of the Companies Act, 2013:
- Companies may be fined up to INR 3 lakh
- Officers in default may face fines up to INR 50,000
However, in recognition of the compliance burden on smaller entities, Section 446B of the Companies Act, 2013 provides for reduced penalties in cases involving small companies and One Person Companies (OPCs).
It is important to note that the obligation to comply with the enhanced disclosure norms remains uniform across all classes of companies, irrespective of the scale or structure. The reduced penalty provision offers relief in monetary terms but does not exempt any entity from adhering to the prescribed disclosure obligations.
COMPLIANCE IMPLICATIONS AND ACTION POINTS FOR COMPANIES
The implementation of the Companies (Accounts) Second Amendment Rules, 2025, marks a significant evolution in how companies are expected to address workplace welfare in their statutory disclosures. Board Reports for financial years beginning on or after 1 April 2024 (and filed subsequent to 14 July 2025) should be revised to incorporate disclosures required under the new Rule 8(5). The companies must take the following actions to ensure compliance and promote organisational accountability:
- Establish adequate mechanisms for recording and tracking complaints of sexual harassment and their timelines of resolution. The records should clearly indicate whether each complaint has been addressed within the 90-day timeframe mandated under the POSH Rules;
- Ensure that ICCs are running smoothly, trained and able to respond at once with inquiry;
- Companies must revisit their existing HR policies to confirm alignment with the Maternity Benefit Act, 1961;
- Documentation of all benefits provided and actions taken under the POSH and Maternity Benefit laws must be maintained. These records will support the company’s statutory declarations and may be subject to regulatory review.
- Effective compliance will require collaboration among legal, HR, secretarial, and audit teams to ensure that the required disclosures are accurate, complete, and properly reflected in the Board’s Report.
CONCLUSION
The Companies (Accounts) Second Amendment Rules, 2025 mark a turning point in Indian corporate governance. By mandating detailed disclosures on sexual harassment and maternity benefits, the MCA reinforces the principle that compliance must be measurable, auditable, and public-facing. Companies are now expected to reflect internal workplace practices in their statutory reporting, making governance not just a legal formality but a demonstration of ethical responsibility. Beyond legal compliance, this reform aligns with broader ESG (Environmental, Social, and Governance) goals, reinforcing that transparency and ethical conduct are central to sustainable business leadership in today’s corporate landscape. Companies must view this not just as a reporting exercise, but as a strategic compliance risk area. Inconsistent or inaccurate disclosures may invite regulatory scrutiny or reputational damage.
