IOC, GAIL and ONGC fined for fourth quarter in a row for failing to appoint directors

Oil and Natural Gas Corporation (ONGC) logo. File | Photo source: Reuters

State-owned oil and gas giants including IndianOil, ONGC and GAIL (India) Ltd have been fined for the fourth quarter in a row for failing to meet listing requirements for the required number of directors on the board.

Stock exchanges have imposed a cumulative penalty of ₹34 lakh on oil refining and fuel marketing giants Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), explorers Oil and Natural Gas Corporation (ONGC) ) and Stock exchange filings show Oil India Ltd (OIL), gas utility GAIL and refinery Mangalore Refinery and Petrochemicals Ltd (MRPL) for failing to meet the stock exchange listing requirement in the January-March quarter.

In separate filings, the companies detailed penalties imposed by the BSE and NSE for not having the required number of independent directors or an authorized woman director in the quarter ended March 31, 2024 (fourth quarter of fiscal year 2023-2024), but were quick to point out that the appointments of directors done by the government and they play no role in it.

The companies were fined for the same reason in the previous three quarters as well.

IOC, HPCL, BPCL, GAIL, OIL and MRPL in separate filings said they were fined Rs 5,36,900 each for the fourth quarter. ONGC faces a fine of ₹182,900.

Stock exchange listing standards require companies to have independent directors in the same proportion as executive or functional directors. They must also have at least one female director on the board.

ONGC said it was fined for not having one independent director on its board.

The IOC stated that “the power to appoint directors (including independent directors) rests with the Ministry of Petroleum and Natural Gas, Government of India, and as a result, there is a shortage of independent directors including no appointment of independent directors on the board of the company during the quarter ended March 31, 2024 r. did not result from the company’s negligence/failure to perform its obligations.”

“Accordingly, IndianOil should not be held liable for the payment of financial penalties and they should be waived,” the IOC said.

Stating that it regularly fills the positions of independent directors on the company’s board along with the parent ministry, the company said it has “received similar notices from BSE and NSE imposing fines in the past and quashing applications filed by the company have been favorably considered by the stock exchanges.” ”

HPCL and BPCL have issued similar statements, while GAIL said the appointments are beyond the competence/control of the company’s management. OIL said it had asked the ministry to appoint independent directors.

MRPL said it is constantly in contact with the ministry regarding the appointment of the required number of independent directors on the board and is actively considering the matter.

The companies were fined ₹5,42,800 each for the third quarter (October-December 2023). They faced a similar penalty in the second quarter (July–September 2023).

For non-compliance between April and June 2023, ONGC was fined ₹3.36 lakh, IOC fine ₹5.36 lakh and GAIL ₹2.71 lakh. HPCL and BPCL were asked to pay a fine of ₹3.6 lakh, while Oil India was fined ₹5.37 lakh.