New Delhi — REC Limited, a government-owned infrastructure financing firm under India’s Ministry of Power, has requested stock exchanges to waive a regulatory fine imposed for non-compliance with board composition rules.
The company submitted its official response to both the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE), explaining the circumstances behind the delay in appointing required independent directors.
Why the Fine Was Imposed
The penalty stems from a violation of governance norms set by the Securities and Exchange Board of India (SEBI) under its Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.
According to SEBI rules, publicly listed companies must maintain:
- A minimum number of independent directors
- At least one woman independent director
REC failed to meet these requirements during the quarter ending December 31, 2025. As a result, the exchanges imposed a fine of ₹5,000 per day, totaling approximately ₹4.6 lakh ($5,500 USD), along with applicable taxes.
REC’s Explanation
In its board meeting held on March 16, 2026, REC acknowledged the non-compliance but argued that the delay was beyond its control.
The company emphasized that:
- Appointment of independent directors in public sector enterprises is handled by the Ministry of Power
- Final authority rests with the Government of India, not the company’s management
- REC has been actively following up with the ministry to fill vacant positions
Based on these factors, REC has formally requested the exchanges to:
- Waive the existing fine
- Avoid imposing further penalties until appointments are completed
Governance Challenge in State-Owned Firms
The case highlights a broader challenge faced by government-controlled companies in India, where board appointments often require multiple layers of administrative approval.
Unlike private firms, entities like REC cannot independently appoint directors, as such decisions are typically made by the President of India through the concerned ministry.
Company Profile
Headquartered in Gurugram, REC Limited is a major player in financing power sector projects across India. The company operates multiple regional offices in cities such as Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad, supporting infrastructure development nationwide.
What Happens Next
REC stated it will continue coordinating with the Ministry of Power to expedite the appointment of independent and women directors to ensure compliance in upcoming quarters.
The final decision on the waiver request now rests with NSE and BSE, which will review the company’s explanation and determine whether relief from the penalty is justified.
Broader Implications
The outcome of this case could set an important precedent for other state-owned enterprises facing similar compliance issues, particularly where regulatory requirements intersect with government-controlled appointment processes.
For now, REC’s situation underscores the tension between strict corporate governance standards and the operational realities of public sector management in India.