When POSH Compliance Reaches the Boardroom: Lessons from the Ceeta Industries Orders

Authored by Vishaka S

Sexual harassment compliance is often viewed primarily as an HR or workplace-policy obligation. The Internal Complaints Committee (ICC), POSH policy, employee awareness sessions and complaint-handling mechanisms are generally treated as the core elements of compliance.

However, for companies, POSH compliance also has a corporate reporting dimension. The consequences of overlooking that dimension were brought into focus in the proceedings involving Ceeta Industries Limited, where the Registrar of Companies (ROC), Karnataka imposed penalties on the company and its officers for failing to make the required disclosure regarding compliance with the ICC requirements in the Board’s reports.

The subsequent appellate order reduced the penalty substantially, but did not erase the finding of default. The orders assume renewed relevance in light of the Companies (Accounts) Second Amendment Rules, 2025, which have expanded the POSH-related disclosures required in a company’s Board’s Report and its extract thereof.

The statutory disclosure obligation

Section 134(3) of the Companies Act, 2013 requires the Board’s Report to contain prescribed information and disclosures. Rule 8(5)(x) of the Companies (Accounts) Rules, 2014 subsequently required the Board’s Report to contain a statement that the company had complied with the provisions relating to the constitution of the Internal Complaints Committee under the POSH Act.

The requirement was introduced through the Companies (Accounts) Amendment Rules, 2018, making POSH compliance a matter that extended beyond internal workplace administration and into the company’s statutory reporting framework.

It was this disclosure requirement that came under scrutiny in the Ceeta Industries matter.

The Ceeta Industries order: A reporting lapse attracts corporate penalties

During an inquiry, the ROC Karnataka noticed that the Board’s Reports attached to the financial statements for the years ending 2019 – 2020 did not contain the required statement regarding compliance with the provisions relating to the constitution of the ICC under the POSH Act.

The ROC treated the omission as a violation of Section 134(3) of the Companies Act and penalty imposed as per the Companies Act was significant – for each of the two years, the company was subjected to a penalty of ₹3 lakh, while the Managing Director, CFO (KMP) and Company Secretary were each subjected to ₹50,000. The aggregate penalty therefore came to ₹9 lakh.

The company sought to explain the omission by pointing out that each of its establishments had fewer than ten employees and that, according to its understanding, an ICC was therefore not required. It also submitted that there had been no complaint from any woman employee and that the omission from the Board’s Report was neither intentional nor deliberate. The ROC nevertheless proceeded with the penalty.

The significance of the order lies in the fact that the issue was not a complaint of sexual harassment, nor an allegation that the company had failed to conduct an inquiry. The default arose from non-disclosure in the Board’s Report.

In other words, POSH compliance had become a Companies Act reporting issue.

The appeal: Penalty reduced, but the default remained

Ceeta Industries and the concerned officers appealed the ROC’s order before the Regional Director, South East Region.

At the hearing, the appellants reiterated that the company had maintained a safe and harassment-free workplace and that the non-disclosure was inadvertent. They also relied upon the fact that the company had subsequently complied with the relevant requirements and that there were no women employees during the relevant period.

The Regional Director took these circumstances into account. Importantly, however, the appellate order did not overturn the finding that a default had occurred.

Instead, the Regional Director exercised discretion to reduce the penalty to 20% of the penalty imposed by the ROC. The revised penalty was ₹60,000 for the company for each of the two years, and ₹10,000 for each of the three officers for each year. The aggregate penalty was consequently reduced from ₹9 lakh to ₹1.80 lakh.

The 2025 amendment- POSH disclosure becomes more granular

The Ceeta Industries orders dealt with the disclosure regime as it existed at the time. That regime has since become more detailed.

On 30 May 2025, the Companies (Accounts) Second Amendment Rules, 2025, were notified, effective from 14 July 2025.

The Board’s Report must now contain, along with the existing statement relating to compliance with the constitution of the Internal Complaints Committee, and specific information regarding:

• the number of sexual harassment complaints received during the year;
• the number of complaints disposed of during the year; and
• the number of cases pending for more than ninety days.

The amendment also introduced a separate requirement under Rule 8(5)(xiii) concerning a statement on compliance with the Maternity Benefit Act, 1961.

This represents a significant shift in the nature of corporate POSH reporting. The earlier requirement essentially called for a compliance statement. The amended framework requires companies to maintain and report specific POSH-related data.

From compliance statement to accountability mechanism

The significance of the Ceeta Industries orders therefore extends beyond the penalty of ₹1.80 lakh ultimately payable.

The case demonstrates that POSH compliance cannot be compartmentalised as an HR function operating independently of the company’s statutory reporting processes. Once POSH information forms part of the Board’s Report, the responsibility necessarily involves multiple stakeholders – HR, the Internal Committee, legal and compliance teams, the Company Secretary, finance and ultimately the Board.

The 2025 amendment makes this coordination even more important. Companies now need reliable systems to track complaint data throughout the financial year so that the information disclosed in the Board’s Report is accurate and reconcilable with the records maintained by the Internal Committee.

This also raises an important practical question- Who owns the data?

The answer cannot simply be “HR”. Complaint-related information may originate with the Internal Committee, while statutory reporting may be coordinated by the Company Secretary or finance team. The Board’s Report, however, is ultimately a corporate document. A mechanism for verification and cross-functional confirmation is therefore essential.

The larger lesson for companies

The Ceeta Industries proceedings also demonstrate why a seemingly technical omission can have consequences under the Companies Act.

The company’s position that the omission was unintentional and that the relevant POSH requirements were not applicable as understood by it did not prevent the ROC from treating the reporting requirement as a statutory obligation.

The 2025 amendment makes it even less appropriate to treat POSH disclosure as a boilerplate statement to be carried forward from one year’s Board’s Report to the next.

Companies should now consider whether their POSH compliance framework enables them to accurately answer, at the end of every financial year:

How many complaints were received? How many were disposed of? How many remained pending beyond ninety days? And can the company substantiate the figures reported in its Board’s Report?

The answers require more than a policy on paper. They require functioning Internal Committees, appropriate record-keeping, coordination between the relevant teams and a clear corporate reporting process.

POSH data should not be an afterthought at the time of finalising the Board’s Report. It should be part of the compliance architecture throughout the year.