The Centre has the authority to nominate directors, PSUs inform stock exchanges
Public sector undertakings (PSUs) that have been fined by the stock exchanges have informed them that they have no influence over the appointment of directors because that power belongs to the government. As a government-owned corporation, ONGC responded to the stock exchanges by stating that the Government of India (GoI) holds the authority to nominate the Directors, including Independent Directors, in accordance with the firm’s articles of association.
Up until May 4, 2023, the corporation complied with the board’s makeup. The need for the appointment of an additional Independent Director was communicated to the Union Government via a letter dated May 8, 2023, and a copy of the said letter was also communicated to stock exchanges, according to the ONGC, after the Appointments Committee of Cabinet appointed Director (HR), effective as of the following day.
It should be highlighted that the aforementioned non-compliance with the Board composition standards was not the result of corporate carelessness or default and was not under the management of the company, and ongoing efforts are being made to meet the compliance requirements. GoI has been asked to nominate the necessary number of independent directors for the Board, the statement read. The company has written letters to stock exchanges asking them to waive the penalties because the choice of directors is outside of its control.
Indian Oil announced that it has received notices from BSE and the National Stock Exchange of India Limited (NSE) regarding non-compliance with Regulation 17(1) of the SEBI LODR for failing to have a woman independent director on its board during the quarter ended June 30, 2023, and that BSE and NSE have imposed fines of Rs 5,36,900 each for such non-compliance. Similar to ONGC’s response, Indian Oil has assured them that because it is a government-owned enterprise and that the authority to name directors, including independent directors, rests with the Ministry of Petroleum and Natural Gas, Government of India, the absence of a Woman Independent Director on the Board was not the result of any carelessness or error on the part of the business.
