Public sector undertakings (PSUs) that have been fined by stock exchanges have told them that the appointment of directors lies beyond their control and is vested with the government.
“It is stated that ONGC, being a government company, power of appointment of Director (including Independent Director) is vested with the Government of India (GoI) as per the Articles of Association of the Company,” ONGC said in a reply to stock exchanges.
The company was compliant with composition of Board upto 04.05.2023. Upon appointment of Director (HR) w.e.f. 05.05.2023, by the Appointments Committee of Cabinet, Government of India (GoI), requirement for appointment of additional Independent Director was submitted to the Government of India (GoI) vide letter dated 08.05.2023 and copy of said letter was also submitted to Stock Exchanges, ONGC said.
“It may be noted that the said non-compliance with regard to the composition of the Board was neither due to negligence/default by the Company nor within the control of the management of the company and constant efforts are being made to meet the compliance requirements. GoI has been requested for nomination of requisite number of Independent Director on the Board of the Company,” ONGC said.
Since, the appointment of directors is beyond control of the company, request letters have been submitted to stock exchanges for waiving off the fine levied, ONGC said.
Indian Oil said the company has received notices from BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE) regarding non-compliance with the provision of Regulation 17(1) of the SEBI LODR for not having a woman independent director on the board of the company during the quarter ended June 30, 2023, and imposition of fine of Rs 5,36,900 each by BSE and NSE for such non- compliance.
In response to the notices, Indian Oil has represented to the BSE and NSE that being a government company, the power to appoint directors (including independent directors) vests with the MoP&NG, GoI and hence the non-appointment of women independent director on the Board during the quarter ended June 30, 2023 was not due to any negligence/fault by the company.
“Accordingly, Indian Oil should not be held liable to pay the fines and the same should be waived-off. Indian Oil regularly takes up with MoP&NG 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. We would also like to inform that the Company had received similar notices from the BSE and NSE in the past imposing fines and waiver request from the Company was considered favourably by the Exchanges,” it said.