IOC, GAIL, ONGC fined for 4th straight quarter for failure to appoint directors

Indian Oil, ONGC and GAIL have been slapped with fines for the fourth straight quarter for failing to meet listing requirements of having the requisite number of directors on their board
New Delhi: For the fourth consecutive quarter, state-owned oil and gas behemoths, including Indian Oil, ONGC, and GAIL (India) Ltd, have incurred penalties for not meeting listing requirements regarding board composition.

The stock exchanges imposed an aggregate fine of Rs 34 lakh on major entities such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Oil and Natural Gas Corporation (ONGC), Oil India Ltd (OIL), gas utility GAIL, and Mangalore Refinery and Petrochemicals Ltd (MRPL). These fines stem from non-compliance with the stipulation of having the requisite number of directors on their boards during the January-March 2024 quarter, as indicated in stock exchange filings.

In their individual disclosures, the companies outlined the fines levied by both BSE and NSE for either lacking the required number of independent directors or the mandated woman director during the quarter ending March 31, 2024. They emphasized, however, that the responsibility for director appointments lies with the government, not the companies themselves.

This issue has persisted across the preceding three quarters as well.

IOC, HPCL, BPCL, GAIL, OIL, and MRPL each reported a fine of Rs 536,900 for the fourth quarter, while ONGC was fined Rs 182,900.

Listing regulations mandate that companies must have independent directors in proportion to executive or functional directors, in addition to having at least one female director on the board.

ONGC acknowledged the fine resulted from a shortfall of one independent director on its board. IOC explained that the Ministry of Petroleum and Natural Gas, Government of India, holds the authority to appoint directors, including independent ones. Consequently, the shortfall was not due to any fault or oversight on the part of the company.

IOC asserted that it should not be liable for the fines and requested their waiver, noting that past waiver requests had been favorably considered by the exchanges.

HPCL and BPCL issued similar statements, while GAIL emphasized that appointments are beyond the control of company management. OIL stated it has formally requested the ministry to appoint independent directors. MRPL highlighted its ongoing efforts to secure the necessary board appointments, which are actively under consideration.

In the third quarter (October-December 2023), the companies were fined Rs 542,800 each. Similar fines were imposed in the second quarter (July-September 2023).

For the first quarter (April-June 2023), ONGC faced a fine of Rs 3.36 lakh, IOC Rs 5.36 lakh, and GAIL Rs 2.71 lakh. HPCL and BPCL each incurred fines of Rs 3.6 lakh, while Oil India was penalized Rs 5.37 lakh.