Source: BS
Context:
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have imposed penalties on Mahanagar Telephone Nigam Limited (MTNL) for violating SEBI’s board composition norms.
Reason for Non-Compliance: Improper constitution of the following committees:
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations, 2015).
Nomination & Remuneration Committee (NRC)
- Relevant Regulation: Regulation 19 of SEBI LODR, 2015
- Requirement:
- NRC must have at least 3 directors, all non-executive.
- At least 50% must be independent directors.
- The Chairperson of NRC must be an independent director.
Stakeholders’ Relationship Committee (SRC)
- Relevant Regulation: Regulation 20 of SEBI LODR, 2015
- Requirement:
- Committee must consist of a chairperson (non-executive) and such other members as decided by the board.
- Looks after redressal of grievances of security holders (shareholders, debenture holders, etc.).
Risk Management Committee (RMC)
- Relevant Regulation: Regulation 21 of SEBI LODR, 2015
- Requirement:
- Mandatory for top 1,000 listed entities by market cap.
- Committee must have a majority of board members.
- Chairperson must be a board member.
- At least one independent director must be a member.
Nature of Violation
- Failure to properly constitute NRC, SRC, and RMC = Violation of SEBI LODR, 2015 (Regulations 19, 20, 21).
- It is treated as non-compliance with corporate governance norms.
- SEBI may levy fines under SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018/77 (May 2018) prescribing standardized penalties for LODR violations.
About MTNL
- Full Form: Mahanagar Telephone Nigam Limited
- Status: Wholly owned subsidiary of Bharat Sanchar Nigam Limited (BSNL)
- Headquarters: New Delhi
- Sector: State-run telecom service provider
