BSE, NSE impose fines on IRCON for non-compliance with SEBI regulations

New Delhi: IRCON International Limited (IRCON) has been penalized by both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for non-compliance with regulatory requirements. The two exchanges have imposed fines of Rs 5,36,900 each on the company for failing to meet the standards set under Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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This penalty was levied because IRCON's board did not meet the requirement of having at least half its members as Independent Directors during the June 30, 2024 quarter. The company disclosed this development in a regulatory filing on Thursday.

IRCON clarified that the responsibility for appointing Directors, including Independent ones, lies solely with the Government of India. The company explained that as a government entity, governed by the Companies Act, 2013, and its Articles of Association, all board appointments are made by the Ministry of Railways. IRCON has no authority over these appointments.

This is not the first instance where IRCON has faced such penalties. In November 2023, the company was fined Rs 10,85,600 for similar non-compliance issues.

The Department of Public Enterprises (DPE) guidelines dictate the composition of Public Sector Undertakings (PSUs) boards. The number of Independent Directors required on a board depends on the role of the Chairman. If the Chairman is non-executive, at least one-third of the board should consist of independent directors; if the Chairman is executive, at least half must be Independent.

Independent Directors are crucial for bringing an objective perspective to the board’s discussions, particularly on matters related to strategy, performance, and governance. They also play a key role in scrutinizing the management's performance and safeguarding the interests of all stakeholders.

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