New Delhi: Five state-owned listed companies: Bharat Heavy Electricals Ltd. (BHEL), Cochin Shipyard Ltd. (CSL), Indian Railway Catering and Tourism Corporation (IRCTC), Mishra Dhatu Nigam Ltd. (MIDHANI), and MOIL Ltd., have informed stock exchanges that they have received notices from BSE and the National Stock Exchange (NSE) imposing fines for non-compliance with certain provisions of the Securities and Exchange Board of India’s (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations for the quarter ended March 31.
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The violations primarily relate to inadequate representation of independent directors on company boards and the resultant non-compliance with board-level committee requirements prescribed under Regulations 17, 18 and 19 of the SEBI LODR framework.
BHEL disclosed that BSE and NSE have each levied a fine of Rs 5.49 lakh, including GST. The company said the number of independent directors on its board fell below the prescribed level as of March 31, 2026. Following the completion of the tenure of two independent directors on March 27, 2026, only one independent director remained on the board, resulting in non-compliance not only with board composition norms but also with the constitution of the Audit Committee and Nomination and Remuneration Committee.
Cochin Shipyard received fines of Rs 9.56 lakh each from BSE and NSE, the highest among the five companies. The penalties were imposed for non-compliance with board composition requirements and deficiencies in the constitution of the Audit Committee and Nomination and Remuneration Committee during the March quarter.
IRCTC reported fines of Rs 5.31 lakh each from the two exchanges for non-compliance with Regulation 17(1), citing shortcomings in board composition, including the absence of a woman director as required under SEBI regulations.
MIDHANI said it was fined Rs 4.96 lakh each by BSE and NSE for non-compliance related to board composition requirements under Regulation 17(1). The defence PSU noted that appointments to its board are made by the Government of India through the Ministry of Defence and are beyond the company's direct control.
MOIL also received fines of Rs 5.31 lakh each from NSE and BSE for non-compliance concerning board composition during the quarter ended March 31, 2026.
All five companies emphasized that they are Government of India enterprises and that the authority to appoint directors, including independent directors, rests with the respective ministries and the Government of India. The companies stated that they have repeatedly taken up the matter with the government for appointment of the requisite number of independent directors to ensure compliance with SEBI regulations.
The companies further clarified that the penalties would have no material impact on their operations, financial performance or business activities. BHEL, CSL, IRCTC and MIDHANI have indicated that they will seek waivers of the fines from the stock exchanges, citing the fact that the non-compliances arose from delays in government appointments rather than any failure on the part of company managements.
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The disclosures once again highlight a recurring governance challenge faced by several public sector enterprises, where delays in appointments of independent directors by the government often lead to temporary non-compliance with SEBI's corporate governance norms despite efforts by company managements to fill the vacancies.
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