Indian Oil Corporation has informed the stock exchanges that K Jairaj (retired IAS officer), Nesar Ahmad (past president, Institute of Company Secretaries of India), Sunil Krishna (former DG, NHRC), and Sayan Chatterjee (retired IAS officer) have ceased to be independent directors on its board.

At first glance, this is a normal announcement made by a company following good corporate governance norms. But, there is more to it than meets the eye.

A source in the know of the developments said that public sector oil companies have been informally told by higher authorities in the Ministry for Petroleum & Natural Gas that all such appointments on their boards made during the previous UPA regime will be reviewed. This, the source said, was based on directions from the Prime Minister’s Office.

Appointments of these four directors on the Indian Oil board were made in February-March. The appointees had over two years to go before their term expires. One of the appointees on the board told Business Line that “no reason has been cited by the company for this decision.”

The appointments were to be confirmed at the company’s annual general meeting held on August 27 at Mumbai, but it did not move this resolution, which meant termination of their appointments.

Another person said Hindustan Petroleum Corporation had also taken a similar step.

The process for appointing an independent director on a public sector company’s board is akin to that of appointing a functional director of such entities. The nodal Ministry selects the name from the Department for Public Enterprises’ list for such directors, and sends it to the Search Committee.

The Committee then does its own scrutiny and recommends the name/names to the nodal Ministry. It is the nodal Ministry that approaches the Appointments Committee of Cabinet (ACC), chaired by the Prime Minister, for the final notification. The only other member of ACC is the Home Minister.

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