The Hindu Business Line : ONGC board gets 4 more independent directors

The total strength of independent directors on the board of Oil and Natural Gas Corporation (ONGC) has gone up to seven with the Petroleum Ministry recently appointing four more non-official part-time directors.

To meet the requirements of the Securities and Exchange Board of India revised Clause 49 of Listing Agreement, which came into effect from January 1, the ONGC board required seven independent directors.

The company's board composition comprised 13 members, which included three independent directors, seven functional directors including the Executive Chairman, two Government nominees and one Indian Oil Corporation nominee (shareholder).

Clause 49

As per the revised Clause 49, company boards should have an optimum combination of executive and non-executive directors with not less than 50 per cent of the board comprising non-executive directors and where the Chairman of the board is an executive director, at least half of the board should comprise independent directors.

The four independent directors who have been appointed are Dr R.K. Pachauri, Director General of TERI; Mr V.P. Singh, Former Chairman and Managing Director of IFCI; Mr P.K. Choudhury, MD of ICRA; and Dr Bakul H. Dholakia of IIM Ahmedabad.

Tenure

As per the Ministry communication, "The directors have been appointed for a period of three years or further orders, whichever is the earlier." The existing three independent directors on the company's board are Mr M.M. Chitale, Mr U. Sundarajan, and Mr Rajesh V. Shah.

The newly inducted independent directors are expected to participate in the next board meeting of the company slated for later this month.

Asked whether this in effect would mean that the company was compliant with the provisions of the revised Clause 49, sources said, that there was a possibility that the Indian Oil Corporation nominee could be considered as special invitee and not as a board member. This is because IOC has offloaded a major portion of its stake in ONGC, sources explained.

If the IOC nominee was considered as special invitee then it would mean that the ONGC board comprises seven functional directors including the Executive Chairman, two Government nominees, and seven independent directors, thus, meeting the SEBI requirement, the official added.

As per the Article of Association of ONGC its board strength cannot exceed 21.

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