The power to appoint directors vested with Centre, PSUs tell stock exchanges
ONGC, Indian Oil object to fines imposed for not having directors on Board
image for illustrative purpose
Public sector undertakings (PSUs) that have been fined by stock exchanges have told them that the appointment of directors lies beyond their control as it is vested with the government.
"It is stated that as regards ONGC, being a government company, the power of appointment of a 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 the Board up to May 4, 2023. Upon appointment of Director (HR) effective from the next day, by the Appointments Committee of Cabinet, the requirement for appointment of additional independent director was submitted to the Union Government vide letter dated 08.05.2023 and copy of the said letter was also submitted to stock exchanges, the ONGC clarified.
"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," it 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 that has levied on it.
Meanwhile, Indian Oil said the company has received notices from BSE and the 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 its board, 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.
Similar to the response of ONGC, Indian Oil has represented to them 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 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.
