Acting against listed firms without a mandatory woman director, market regulator Sebi on Wednesday announced a minimum Rs 50,000 fine on them and warned of further action, including against promoters and directors, if they remain non-compliant beyond six months.
Without naming the companies that failed to appoint at least one woman director within the stipulated deadline of March 31, Sebi announced a four-stage penalty structure wherein fines would increase with the passage of time.
While some experts opined that the fine is very small and PSUs being in non-compliance might have been at play, officials said that the non-complaint firms were mostly small ones and Sebi has decided to take an "accommodative" stance.
Sebi had warned of "serious consequences" for non-compliance, but a large number of companies, including many state-run firms, actually failed to meet the deadline.
As per data compiled by Prime Database, as many as 32 public sector firms have failed to comply and they include GAIL, ONGC, NTPC, SAIL, Punjab National Bank, Bharat Electronics, BPCL, Container Corp, Power Finance Corp and Rural Electrification Corporation, where the government incidentally sold 5 per cent stake today for Rs 1,550 crore.
Reacting to Sebi's action, Prime Database Managing Director Pranav Haldea said the fine is small, but "at least some action has been taken".
Sebi has asked the stock exchanges to levy the fines as the violation relates to the Listing Agreement. As a result, fines would multiply for companies listed on multiple bourses.
As per estimates, over 1,000 companies on the BSE and 180 on the NSE are in non-compliance of the rule, which was first announced by Sebi in February 2014 with an initial deadline of October 1 that year that was later extended by six months.
As per the structure announced on Wednesday, firms will have to pay only the monetary fine and can escape further regulatory action if they comply within next six months, that is till September 30.
The listed companies complying between April 1 and June 30 will have to pay only Rs 50,000. Those complying between July 1 and September 30 this year would need to pay Rs 50,000 and an additional Rs 1,000 per day till compliance.
The listed companies complying on or after October 1, 2015 will have to pay Rs 1.42 lakh, plus Rs 5,000 per day till the date of compliance.
"For any non-compliance beyond September 30, 2015, Sebi may take any other action, against the non-compliant entities, their promoters and/or directors or issue such directions in accordance with law, as considered appropriate," the regulator said in a circular.