Indian Oil Corporation, GAIL and ONGC fined for fourth straight quarter for failure to appoint directors

New Delhi: State-owned oil and gas giants including Indian Oil Corporation, ONGC and GAIL (India) Ltd 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.

Stock exchanges imposed a cumulative fine of Rs 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 Oil India Ltd (OIL), gas utility GAIL, and refiner Mangalore Refinery and Petrochemicals Ltd (MRPL) for not meeting the listing requirement in the January-March quarter, 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 quarter ended March 31, 2024 (fourth quarter of 2023-24 fiscal year), 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 the previous three quarters as well.

IOC, HPCL, BPCL, GAIL, OIL and MRPL in separate filings said they have been slapped with a fine of Rs 536,900 each for the fourth quarter. ONGC faced a fine of Rs 182,900.

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.

ONGC said it has been fined for its board being short of one independent director.

IOC said, “the power to appoint directors (including independent directors) vests with the Ministry of Petroleum and Natural Gas, Government of India and hence the shortfall in independent directors including non-appointment of women independent director on the board of the company during the quarter ended March 31, 2024 was not due to any negligence/default by the company.”

“Accordingly, IndianOil should not be held liable to pay the fines and the same should be waived-off,” IOC said.

Stating that it regularly takes up appointments of independent directors on the company board with parent ministry, the company said it “had received similar notices from the BSE and NSE in the past imposing fines and waiver requests from the company was considered favorably by the exchanges.”

HPCL and BPCL made similar statements, while GAIL said appointments are outside the purview/control of company management. OIL said it has requested the ministry for appointment of independent directors.

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.

The companies were slapped a fine of Rs 5,42,800 each for the third quarter (October-December 2023). They had faced a similar fine for the second quarter (July-September 2023).

For non-compliance in April-June 2023, 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 each asked to pay Rs 3.6 lakh fine, while Oil India had faced a penalty of

Rs 5.37 lakh.