State-owned oil and gas giants, including IndianOil and GAIL (India) Ltd, have incurred fines for the second consecutive quarter due to non-compliance with listing requirements regarding the necessary number of independent directors.
According to the PTI report, stock exchanges have imposed fines on major players in the industry, such as Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Oil India Ltd, Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), GAIL, and Engineers India Ltd, amounting to Rs 5.42 lakh.
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In separate statements, these companies acknowledged the fines imposed by the BSE and NSE but emphasised that the appointment of directors was under government jurisdiction and not within their control. Similar fines were levied in the first quarter for the same reason.
The report added that the fines now stand at a uniform Rs 5,42,800 for all companies, whereas previously, ONGC was fined Rs 3.36 lakh, IOC Rs 5.36 lakh, GAIL Rs 2.71 lakh, HPCL and BPCL Rs 3.6 lakh each, and Oil India faced a penalty of Rs 5.37 lakh.
Listing regulations mandate companies to maintain the same proportion of independent directors as executive or functional directors on their boards, including the inclusion of at least one woman director.
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In its statement, IOC said that, as a government entity, the power to appoint directors, including independent directors, is with the Ministry of Petroleum and Natural Gas (MoPNG), Government of India. Therefore, the absence of a woman independent director on the board during the quarter ending September 30, 2023, was not due to any negligence on the company’s part. The company appealed for the fines to be waived.
GAIL similarly contended that its non-compliance with board composition was not due to any negligence or default but was beyond the control of its management. All directors on GAIL’s board, including independent directors, are nominated or appointed by the Government of India.
According to the PTI, ONGC said that it had twice submitted requests to the government for additional independent director appointments in May and October.
BPCL reported compliance with the listing requirement of having 50% independent directors on the board until April 30 but fell short by one independent director thereafter. BPCL has repeatedly requested the Government of India for the nomination of one independent director and intends to seek waivers for the fines, as the company has no control over director appointments.
