[By Arjun Kapur & Sameep Baral]
The authors are students of Maharashtra National Law University Mumbai.
Introduction
What does it really mean for a workplace to be “safe”? Is it the lack of complaints or a culture where employees feel comfortable raising issues? In India’s fast-changing corporate world, where investor expectations, public scrutiny, and employee voices unite, companies discover that silence is not always beneficial. The Ministry of Corporate Affairs (MCA) has recently pushed for more transparency and accountability, particularly regarding workplace behaviour. A clear example appeared in September 2023 when the Registrar of Companies in Karnataka fined Ceeta Industries for not revealing the structure of its Internal Complaints Committee (ICC) in the Board’s report.
Introduced in 2013 after the Supreme Court’s Vishaka judgment, the POSH Act requires employers to keep a workplace free from sexual harassment and to set up formal ways to address complaints. For example, every organization needs an ICC, with at least half of the members being women. Over the past ten years, the law has become stricter and broader, including requirements for regular training, applying to more types of businesses, and setting tighter deadlines. For businesses, following POSH has shifted from a moral choice to a legal necessity within corporate governance.
In this context, the MCA’s 2025 amendments indicate a significant change in the reporting requirements under POSH law for corporate entities. By requiring detailed POSH disclosures in the Board report, regulators expect companies to go beyond basic compliance. This blog discusses the regulatory shift from the 2025 MCA amendments, discussing its practical effects on corporate POSH compliance. It also identifies issues in compliance and suggests fundamental reforms to rethink workplace safety as part of corporate governance, rather than just a legal requirement.
Understanding the 2025 MCA Update
One can see this enforcement trend in the landmark Ceeta Industries case. In September 2023, the Karnataka Registrar of Companies penalized Ceeta Industries for not including the required Board Report statement on its POSH ICC. The company faced fines in several lakhs of rupees, and its key officers were also penalized. This case highlighted that even minor procedural lapses under the POSH framework can lead to strict enforcement. By law, any default in reporting can lead to a penalty of up to ₹3 lakh on the company and ₹50,000 on each defaulting officer per year. This underscores the financial stakes of POSH compliance.
Building on this, the MCA’s Companies (Accounts) Second Amendment Rules, 2025, effective July 14, 2025, represent an apparent policy shift. Unlike the previous compliance regime, which simply confirmed the ICC’s structure in the annual report, the new rules require detailed data-driven disclosures. Under the amended regulations, every company must now report the number of sexual harassment complaints received during the year, how many were resolved in that year, and how many are pending beyond 90 days. The Board’s Report must also state that the company has met the POSH Act’s requirements regarding its ICC formation.
This increase in disclosure turns POSH compliance into a performance measure. Companies must carefully track and record case data since these figures will become part of public filings. The data-driven approach raises the stakes, many unresolved or pending cases can indicate governance problems and damage a company’s reputation, while mistakes or missing information in reporting can lead to legal and financial penalties. This update effectively transforms POSH reporting from a simple formality into a significant corporate responsibility and risk management source.
Why This Update Signals a Governance Shift
By requiring transparency on workplace harassment statistics, the 2025 rules bring POSH into the spotlight. Annual reports will now feature POSH disclosures alongside financial results and governance statements. This change allows the independent directors, auditors, and investors to identify trends in the data. For instance, an increase in complaints or many pending cases may raise questions about oversight or company culture. Board members might actively seek explanations when POSH figures do not meet expectations, turning a previously hidden issue into a key topic of corporate governance. Annual board reports are usually public documents, making each metric visible to stakeholders and the media. For institutional investors and ESG analysts, these disclosure numbers become the new social metrics. Poor outcomes or unresolved cases could impact a company’s social rating and reputation.
Leading governance frameworks consider worker safety a vital issue. Companies are now providing standardized data in this area. Because these reports are public, a pattern of low complaints or numerous backlogs will be noticed. This visibility creates a feedback loop. Companies must review their own processes and culture. Boards may require a closer look at delayed case resolutions or rethink ineffective training programs. Rather than being hidden in the Human Resources (HR) files, POSH has become part of regular corporate reporting. The 2025 update marks a significant step in governance, acknowledging that employee safety and respect are essential for a company’s integrity and performance.
Corporate Blind Spots in POSH
Despite the POSH law and its roots in the Supreme Court’s Vishaka judgment, many Indian companies view compliance as just a simple checklist. It is common to find ICCs that do not function well. For example, they may meet only occasionally, lack diverse representation, or fail to conduct proper training and awareness programs. Some organizations meet the requirement for the number of women and include an HR nominee, but they do not give the ICC the authority to act independently. Employees often do not know their rights or fear backlash, leading to many incidents going unreported. Poor record-keeping and documentation mean that even submitted complaints may go unnoticed. HR departments that manage ICCs can create conflicts of interest when investigations involve their managers. Employees may wonder if an HR-led committee can handle the case fairly if the accused is a supervisor.
In some cases, victims perceive the process as biased, which fosters a culture of silence. From a governance perspective, a reported count of zero complaints in a year can be just as concerning as a backlog. This may reflect fear or inaction rather than a workplace free from harassment. These issues have worsened due to India’s changing work models. Hybrid and remote work introduce new types of harassment, such as offensive messages on corporate chat platforms, unwanted advances during video calls, or cyber-stalking, which traditional complaint processes may struggle to address. In short, merely forming an ICC and filing a report does not suffice. Without strong committees, reliable processes, and a supportive culture, companies remain vulnerable to the very risks the law seeks to prevent.
Reimagining Corporate POSH Practices
To turn legal compliance into an ethical workplace culture, corporate India must shift from reacting to issues to proactively structuring its approach. The first and most urgent change is to protect the Internal Committee (IC) from outside influence, especially from the HR department. While HR often supports ICs administratively, its closeness to leadership and role in performance management can unintentionally bias the process, particularly when a senior executive is involved. One practical solution is to create a rotational system for external members, such as legal professionals, gender experts, or retired judges, appointed by a transparent, third-party panel. Rotating these members annually or biennially ensures independence, reduces internal bias, and brings valuable expertise. Companies could also set up an oversight framework under the Audit Committee or Board Governance Committee to review IC appointment processes. For example, a large IT firm could name an external compliance auditor to assess how all regional ICs operate. This would help make investigations more objective and boost employee trust.
Second, the technological infrastructure should be reconfigured to allow real-time, clear transparency without breaching confidentiality. Creating internal POSH dashboards, similar to those used in whistleblower systems, can enable anonymous, pattern-based reporting that goes directly to the Board. For instance, a multinational FMCG company might generate a monthly analytics report summarizing IC caseloads, average resolution times, department-wise heat maps, and training completion rates. This information would be anonymized and visualized for the C-suite’s review. Such a tool highlights the potential problems early and establishes a way to assess workplace culture. If one department sees a rise in complaints, leadership must investigate underlying issues, such as toxic management practices or gaps in policy. This approach makes workplace safety a measurable part of operations rather than just a hidden HR issue.
In addition to structural reforms, cultural credibility needs a fair assessment. Companies should conduct annual POSH health checks by independent, third-party firms. Like financial audits, these reviews look at case logs, resolution timelines, training effectiveness, employee awareness, and IC functionality. A thorough audit might include anonymous employee surveys, random case file reviews, and mock grievance redressal simulations. For example, a media company with several editorial offices could have an NGO-led audit to check if regional ICs meet mandatory quorum, if meeting minutes are documented, and if complainants know their rights. The audit report could be presented at the annual Board meeting, strengthening compliance and public trust.
Finally, no reform will last if executive incentives do not match POSH goals. Linking key performance indicators (KPIs) for COs and business heads to workplace safety metrics sends a clear message: preventing harassment is a leadership responsibility, not just a task. This could include POSH-related outcomes, timely complaint resolution, team training completion, regular employee feedback on workplace safety, annual appraisals, and bonus assessments. For instance, zonal managers at a retail chain might be evaluated not only on sales targets but also on their region’s POSH audit score and ICC training compliance.
Conclusion
These steps as mentioned above, shift responsibility upward, where real power in a corporate structure lies. They also clarify that POSH compliance should not be considered a legal hassle but part of responsible leadership compliant with the International norms regarding POSH across jurisdictions. Ultimately, linking culture to compensation is the best way to ensure accountability where money triumphs over ethics. In this new era of corporate responsibility, the accurate measure of compliance will not lie in empty declarations but in the quiet confidence of employees who know their dignity is protected and prioritized.