New Delhi: Mahartna Oil PSU, Indian Oil Corporation Limited (Indian Oil) has been penalized by both BSE Limited (BSE) and the National Stock Exchange of India (NSE) Limited for non-compliance with SEBI regulations concerning the composition of its Board of Directors. The exchanges have each imposed a fine of Rs 5,36,900 each, on the company for failing to meet the requirements during the quarter that ended on June 30, 2024. This information has been shared by the oil major in a regulatory filing to the stock exchange on Thursday.
The issue at hand involves a shortfall in the number of Independent Directors on Indian Oil's board, including the absence of a Woman Independent Director, which is mandated under Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR). The regulation stipulates specific guidelines for the composition of the Board of Directors to ensure proper corporate governance practices.
In response to the notices, Indian Oil has formally contested the fines through a letter dated August 22, 2024, addressed to both BSE and NSE. The company has argued that as a Government entity, the authority to appoint Directors, including Independent Directors, lies with the Ministry of Petroleum and Natural Gas (MoP&NG), Government of India. Indian Oil emphasized that the delay in appointing the required Independent Directors, including a Woman Independent Director, was not due to any fault or negligence on the part of the company.
Indian Oil further highlighted that it consistently engages with MoP&NG to expedite the appointment of the necessary Independent Directors to comply with SEBI's corporate governance norms and the Companies Act. The company has also pointed out that it had faced similar situations in the past where fines were imposed, and in those instances, the exchanges had favourably considered their request for a waiver.
The outcome of Indian Oil's current waiver request is awaited as the company continues to advocate for leniency, citing its status as a government-controlled entity and its efforts to comply with regulatory norms.
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