IndianOil, GAIL and others face second quarter of non-compliance fines

State-owned oil and gas giants, including IndianOil and GAIL (India) Ltd, have faced fines for the second consecutive quarter due to non-compliance with listing norms. The fines were imposed by stock exchanges for failing to have the required number of independent directors on their boards. The companies fined include Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Oil India Ltd, GAIL, Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), and Engineers India Ltd.

According to stock exchange filings, fines of Rs 5.42 lakh were imposed on each company. The violations stem from the absence of the mandated independent directors in both the first and second quarters. The companies stressed in their filings that the appointment of directors is determined by the government, and they have no influence over it.

The fines were levied based on the listing norms, which require companies to have independent directors in proportion to executive or functional directors, along with at least one woman director on the board.

In response, IOC argued that, as a government company, the power to appoint directors lies with the Ministry of Petroleum and Natural Gas, and they should not be held liable for fines. GAIL similarly stated that compliance issues were beyond its control as all directors, including independent directors, are nominated by the government.

ONGC reported having submitted requests for additional independent directors to the government. BPCL and HPCL acknowledged the compliance gap and emphasised that they have been requesting the government for necessary nominations. Oil India, being a government enterprise, emphasised that director appointments are made by the administrative ministry and sought a waiver for fines.

Engineers India Ltd (EIL) also sought a waiver, noting that being a government company, the power to appoint directors rests with the Ministry of Petroleum & Natural Gas. EIL is awaiting a response from the ministry.

All companies expressed ongoing efforts to ensure compliance with corporate governance norms and emphasised their lack of control over director appointments. They have approached the stock exchanges for a waiver of the fines.

(With PTI Inputs)