Date:24/05/2005 URL: http://www.thehindubusinessline.com/2005/05/24/stories/2005052402910100.htm

Back To comply with Clause 49 of Listing Agreement — `ONGC board may have fewer Govt directors'

Our Bureau

Mr S.C. Tripathi (right), Secretary, Ministry of Petroleum and Natural Gas, with Mr S. Vijayaraghavan, Director, Petroleum Policy and Analysis Cell, in the Capital on Monday. - Ramesh Sharma

New Delhi , May 23

THE Government on Monday indicated that it would by December 31 bring down its representation on the board of the Oil and Natural Gas Corporation, so as to enable the oil major to conform to the proposed revised Clause 49 of the Listing Agreement.

The Securities and Exchange Board of India has already made it clear that all listed entities would have to comply with the Clause 49 requirements by December 31.

The proposed Clause 49 of the Listing Agreement stipulates that at least 50 per cent of the board should comprise independent directors.

"We have time till December to comply with Clause 49. We may reduce the number of Government directors on the ONGC board," the Petroleum Secretary, Mr S. C. Tripathi, told newspersons here.

He added that the names of 4-5 independent directors had been cleared for appointment on the ONGC board.

The Government-controlled listed entities (where the Government has a majority stake), including ONGC, have in the recent months have been forced to review the composition of their boards on account of the proposed revised Clause 49 and also due to the capital market regulators' stance that the Government nominees on the boards of Government-owned entities cannot be counted as independent directors.

The ONGC board has 14 directors - seven executive directors (whole-time directors) including the chairman and managing director and seven non-executive directors (two officials from the Petroleum Ministry and one from the Finance Ministry), one nominee of Indian Oil Corporation and three non-official part-time directors.

"According to the definition of independent director, ex-officio Government nominee directors and the nominee of IOC cannot be treated as independent directors. Only the three non-official part-time directors qualify the definition of independent directors," an official said.

Non-compliance with Clause 49 (Corporate Governance) can invite punishment of imprisonment of up to 10 years or a fine of up to Rs 25 crore or both.

Besides, stock exchanges can suspend the dealing or trading of the securities of the company.