Penalty On Oil PSUs For Failure To Appoint Independent Directors And Women Directors

For the fourth consecutive quarter, state-owned oil and gas companies, such as IndianOil, ONGC, and GAIL (India), have been penalised for not having a sufficient number of Directors on their Boards in accordance with listing criteria.

Stock exchanges levied a total penalty of Rs 34 lakh on Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Oil and Natural Gas Corporation (ONGC), Oil India Ltd (OIL), GAIL, and Mangalore Refinery and Petrochemicals Ltd (MRPL) for not having enough Directors in the January-March 2024 quarter, according to filings.

The fines stemmed from not having the mandated number of Independent Directors or Woman Directors. The companies attributed this shortfall to government control over Directors’ appointments. Each of the IOC, HPCL, BPCL, GAIL, OIL, and MRPL reported fines of ₹536,900, while ONGC was fined ₹182,900. ONGC specifically noted a shortage of one Independent Director.

The IOC stated that the Ministry of Petroleum and Natural Gas appoints Directors, and the shortfall was not due to company negligence. They requested the fines be waived. HPCL, BPCL, and other companies echoed this, emphasising their ongoing efforts to secure Board appointments through the ministry.

This issue has persisted across multiple quarters, with similar fines imposed in previous periods. For instance, fines in the third quarter of 2023 amounted to ₹5,42,800 each for non-compliance, and varied penalties were issued in earlier quarters.