State-owned oil and gas giants including IndianOil, 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 board.

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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 lakh, stock exchange filings showed.

In separate filings, the companies detailed the fines imposed by the BSE and NSE for either not having the requisite number of independent directors or the mandated women director in the third quarter ended December 31, 2023, but were quick to point out that appointment of directors was done by the government and they had 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 they have been slapped with a fine of Rs 5,42,800 each for the third quarter. While ONGC and its subsidiaries HPCL and MRPL, GAIL and OIL faced fines for not having the required number of independent directors on their board, IOC 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 lakh.

For the latest fine, 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 December 31, 2023 was not due to any negligence/fault by the company." Accordingly, IOC said 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, it had in the past received similar notices from the two stock exchanges and its waiver request was granted.

GAIL in the filing said "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," 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," HPCL said.
MRPL said 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 was beyond the control of the company, OIL said 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.

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, ONGC was slapped with Rs 3.36 lakh fine, IOC Rs 5.36 lakh and GAIL Rs 2.71 lakh fine. HPCL and BPCL were asked to pay Rs 3.6 lakh fine each, while Oil India had faced a penalty of Rs 5.37 lakh.