Public sector Indian Oil, BPCL and gas company GAIL along with other major oil companies have been fined for the fifth consecutive quarter for failing to meet the listing criteria. This fine has been imposed for not appointing the required number of independent and women directors on their boards of directors. Stock markets BSE and NSE have fined Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), Oil India Ltd. (OIL), GAIL (India) Ltd. and Mangalore Refinery and Petrochemicals Ltd. (MRPL) for not meeting the listing requirement in the April-June quarter.
It is necessary to have at least one woman director on the board of directors
The companies said in separate information to the stock exchanges that BSE and NSE have imposed fines for not having the required number of independent directors or mandatory women directors in the first quarter of the current financial year 2024-25. However, they also said that the appointment of directors is to be done by the government and they have no role in it. Companies had to face fines for the same reason in the last four quarters as well. As per the listing rules, companies are required 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 of directors.
What did IOC say?
IOC said that BSE and National Stock Exchange of India Ltd. (NSE) imposed a penalty of Rs 5,36,900-5,36,900 on the company for non-compliance with Regulation 17(1) of SEBI (Listing Obligations and Disclosure Requirements) relating to the composition of the Board of Directors during the quarter ended June 30, 2024. IOC said, “In response to the notice, Indian Oil has informed BSE and NSE through a letter dated August 22, 2024 that being a government company, the right to appoint directors (including independent directors) lies with the Ministry of Petroleum and Natural Gas. As such, the lack of independent directors on the Board of Directors of the company during the quarter ended June 30, 2024, including not appointing a woman independent director, is not due to any negligence/default of the company.”
Government is responsible
The company said that IOC should not be held liable to pay the penalty and it should be waived. The company said that it has been continuously raising the matter with the ministry regarding the appointment of the required number of directors to ensure compliance with corporate governance rules. BPCL said that BSE and NSE have imposed a fine of Rs 2,41,900-2,41,900 on it due to lack of one independent director in the board of directors. The company said that it has no right over the appointment of directors. It will apply to BSE and NSE for waiver of the fine. HPCL said that BSE and NSE have imposed a fine of Rs 5,36,900-5,36,900 on it. A similar fine has been imposed on GAIL. The company said, “The non-compliance with regard to the composition of the board of directors is not due to any negligence / omission of the company. This matter is not within the purview of the management of GAIL itself. Continuous efforts are also being made to meet the compliance requirements.” Oil India and MRPL have also been fined Rs 5,36,900 each by BSE and NSE. The country’s leading oil companies have been non-compliant with listing rules since April last year and have been fined every quarter since then.
