NEW DELHI, 25 Feb: State-owned oil and gas giants, including Indian Oil, the ONGC and GAIL (India), have been slapped fines for the third straight quarter for failing to meet listing norm requirements of having the requisite number of directors on their boards.
Stock exchanges have fined oil refining and fuel marketing giant Indian Oil Corporation (IOC), explorers Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), gas utility GAIL, and refiners Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) a cumulative Rs 32.5 lakhs, stock exchange filings showed.
In separate filings, the companies detailed the fines imposed by the BSE and the NSE for either not having the requisite number of independent directors or the mandated women director in the third quarter ended 31 December, 2023, but were quick to point out that appointment of directors is done by the government and they have no role in it.
The companies had faced fines for the same reason in the previous two quarters, as well.
The six PSUs in separate filings said that they have been slapped with a fine of Rs 5,42,800 each for the third quarter. While the ONGC and its subsidiaries HPCL and MRPL, GAIL and OIL faced fines for not having the required number of independent directors on their boards, the IOC has been fined for not having a woman independent director on its board.
Listing norms require companies to have independent directors in the same proportion as executive or functional directors. They are also required to have at least one woman director on the board.
For the second quarter, IOC, ONGC, OIL, GAIL, Bharat Petroleum Corporation Ltd, HPCL and Engineers India Ltd had faced a fine of Rs 5.42 lakhs.
For the latest fine, the IOC in the regulatory filing said that, “being a government company, the power to appoint directors (including independent directors) vests with the ministry of petroleum and natural gas, government of India, and hence the non-appointment of women independent director on the board during the quarter ended 31 December, 2023 was not due to any negligence/fault by the company.”
Accordingly, the IOC said that it should not be held liable to pay the fines and the same should be waived off.
“IOC regularly takes up with ministry for appointment of requisite number of independent directors (including woman independent director) to ensure compliance with corporate governance norms enunciated under SEBI (LODR) as well as the Companies Act,” it said, adding that it has in the past received similar notices from the two stock exchanges and its waiver request was granted.
The GAIL in the filing said that “appointments are outside the purview/control of the GAIL’s management.”
“The non-compliance with regard to the composition of the board was not within the control of the company and the company has been regularly pursuing with the government of India (GoI) for appointment of requisite numbers of independent directors to meet the compliance requirements,” the ONGC said.
The appointment of directors on its subsidiaries HPCL and MRPL too are done by the government.
“The company is following up with the government from time to time for appointing the required number of directors on its board and GoI is seized of the matter,” the HPCL said.
The MRPL said that it has been continuously following up with the ministry for appointment of requisite number of independent directors on the board and “the same has been under active consideration” of the ministry.
Stating that the non-compliance is beyond the control of the company, the OIL said that it has requested the ministry for appointment of independent directors on the board of the company to comply with Regulation 17(1) of the SEBI (LODR) Regulations, 2015.
The companies had cited similar reasons and remedial action when they had faced fines for non-compliance in the previous two quarters.
The IOC, ONGC, OIL, GAIL, BPCL, HPCL and Engineers India Ltd were slapped with a uniform Rs 5,42,800 fine for the second quarter, as well. For non-compliance in April-June quarter, the ONGC was slapped with Rs 3.36 lakhs fine, IOC Rs 5.36 lakhs and GAIL Rs 2.71 lakhs fine. The HPCL and the BPCL were asked to pay Rs 3.6 lakhs fine each, while Oil India had faced a penalty of Rs 5.37 lakhs. (PTI)