The Bombay Stock Exchange
Credit: Reuters Photo
Stock exchanges have slapped fines on state-owned oil and gas firms including IOC, ONGC and GAIL for their failure to meet listing requirements of having a requisite number of independent directors and women directors.
In separate filings, the companies detailed the fines imposed by the BSE and NSE but were quick to point out that appointment of directors was done by the government and they had no role in it.
Oil and Natural Gas Corporation (ONGC) was slapped a Rs 3.36 lakh fine, while Indian Oil Corporation (IOC) was asked to pay Rs 5.36 lakh fine.
Gas utility GAIL was slapped Rs 2.71 lakh fine, Hindustan Petroleum Corporation Ltd (HPCL) Rs 3.59 lakh, Bharat Petroleum Corporation Ltd (BPCL) Rs 3.6 lakh, Oil India Ltd Rs 5.37 lakh and a fine of Rs 5.37 lakh was imposed on Mangalore Refinery and Petrochemicals Ltd (MRPL).
Except for IOC which was slapped with the fine for not having the required one woman director on the board, all the companies were fined for violating the norm of having the required number of independent directors.
IOC said the power to appoint directors (including independent and women directors) vests with the Ministry of Petroleum and Natural Gas, Government of India.
"And hence the non-appointment of women independent directors on the Board during the quarter ended June 30, 2023 was not due to any negligence / fault by the company," it said. "Accordingly, Indian Oil should not be held liable to pay the fines and the same should be waived-off."
IOC said it regularly takes up the issue with the ministry, for appointment of requisite number of independent directors (including Woman independent director), to ensure compliance with corporate governance norms.
"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 requests from the company was considered favorably by the exchanges," it said.
HPCL made a similar filing and cited past record of stock exchanges waiving such fines.
ONGC said it has requested the government for nomination of the requisite number of independent directors on the board of the company.
"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.
BPCL said it had complied with the requirements for the financial year 2022-23 and till April 30, 2023.
But the appointment of a full-time directors with effect from May 1, 2023 led to BPCL having five whole-time Directors, two nominee directors of the government and six independent directors.
As per norm, BPCL should have had seven independent directors - equal to the executive directors (five whole-time directors and two government nominee directors).
BPCL said it has "requested the Government of India from time to time for the nomination of one independent director. As the directors are appointed after receipt of nomination from Government of India. BPCL has no control over the appointment of Directors."
The firm said it will be approaching BSE Limited and National Stock Exchange of India Limited for waiver of the fines. "Similar letters were received earlier from the stock exchanges for which waiver request was made by BPCL and the same was considered favorably by the stock exchanges" the filing said.
Oil India Ltd (OIL) said the non-compliance was beyond the control of the company as it is a government enterprise and directors are appointed by the administrative ministry, Ministry of Petroleum and Natural Gas.
MRPL said it is following up with the government from time to time for appointing the required number of directors on its board.
GAIL said, "all the directors on the board of GAIL (including independent directors) are nominated/appointed by the Government of India. As such, appointments are outside the purview/control of the GAIL's management."