Financial Daily from THE HINDU group of publications
Friday, Jan 13, 2006
Financial Daily from THE HINDU group of publications Friday, Jan 13, 2006 |
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Petroleum Corporate - Corporate Governance Clause 49: ONGC may be asked to convene EGM Richa Mishra
New Delhi , Jan. 12 TO meet the norm prescribed by Securities and Exchange Board of India on independent directors, the Petroleum Ministry is likely to ask Oil and Natural Gas Corporation (ONGC) to expand its board strength. Indications are that the public sector oil giant may be asked to convene an extraordinary general meeting to seek shareholders' nod to amend its Articles of Association (AoA), which would enable the company to increase its board's strength. Official sources, however, declined to give the revised size of the board. Currently, ONGC's board has 14 members — seven functional directors, including the Executive Chairman, three Government nominees, one Indian Oil Corporation representative (shareholder) and three independent directors. According to the revised Clause 49 of the Listing Agreement, which came into effect from January 1, at least 50 per cent of the board of a listed company having an Executive Chairman should comprise independent directors. If the existing board strength of 11 non-independent directors is taken as a base, ONGC would require eight more independent directors to meet the SEBI norm of having at least a 50 per cent composition of independent directors. However, the appointment of eight more independent directors would have led to the breach of ONGC's AoA, which stipulates that the board strength cannot exceed 21. For the purpose of SEBI's revised Clause 49, the Government nominees are not to be considered as independent directors. No formal communication yet: When contacted by Business Line, ONGC officials maintained that they were yet to receive any formal communication from the Petroleum Ministry. Asked whether the company favoured amending the AoA, and what would be the strength it would be looking at, ONGC officials said, it was for the Ministry of Petroleum and Natural Gas to take a decision. BPCL board expansion: Meanwhile, Bharat Petroleum Corporation Ltd proposes to convene an EGM to seek shareholders' approval to expand its board strength from the existing 12 to 16 soon to meet the SEBI norms. Company sources said the date of the meeting is yet to be decided. It would be held only after the already scheduled EGM to consider the proposal for merger of Kochi Refineries Ltd with BPCL on January 16, the sources said. Indian Oil EGM: Indian Oil Corporation Ltd has convened an EGM on January 27 to seek shareholders' nod to amend its AoA. An amendment to the company's AoA would enable it to enhance its board strength from the existing 17 to 22. Currently, the company's AoA stipulates that the board strength cannot exceed 17 members.
Related Stories: More Stories on : Petroleum | Corporate Governance
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