Hindustan Zinc Fined by BSE and NSE for Board Non-Compliance

23 Aug 2024 , 11:44 AM

Hindustan Zinc Ltd (HZL), a subsidiary of Vedanta Group, has been fined by both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) with penalties of ₹5.37 lakh each. These fines were imposed due to HZL’s non-compliance with the Securities and Exchange Board of India (SEBI) regulations, specifically related to the requirement for an adequate number of independent directors on its board.

On August 21, 2024, HZL received formal notices from both exchanges indicating penalties for breaching Regulation 17(1) of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations. This regulation mandates a specific board composition that includes independent directors to ensure corporate governance and transparency.

In response to these notices, HZL has acknowledged the penalties and is actively engaging with the Ministry of Mines to address the non-compliance issues. The company is working towards fulfilling the regulatory requirements to bring its board composition in line with SEBI’s standards.

The company also confirmed that it has already met the requirement for including a woman independent director on its board, which was one of the compliance issues highlighted by SEBI.

As of the current date, HZL’s board comprises three independent directors. However, the penalties suggest that this composition was not sufficient to meet the SEBI regulations, likely due to the required number or specific criteria for independence.

Hindustan Zinc Ltd (HZL) is a prominent Indian company specializing in the production of zinc, lead, silver, and cadmium. The company is recognized as the world’s second-largest producer of zinc and has a significant presence in the global market for these essential metals.

The company was originally a Central Public Sector Undertaking (PSU), which was part of the Indian government’s portfolio. In 2003, during the disinvestment program led by the Atal Bihari Vajpayee government, HZL was sold to Vedanta Limited, marking a significant shift from public to private ownership.

HZL was formally incorporated on January 10, 1966, from the erstwhile Metal Corporation of India, establishing it as a Public Sector Undertaking. Over the decades, HZL grew to become a key player in the mining and resource production industry in India.

The disinvestment of HZL in 2001 was part of a broader initiative by the Government of India to privatize loss-making PSUs. This strategic sale aimed at reviving and enhancing the efficiency of these enterprises by transferring them to private ownership.

HZL’s journey from a PSU to a subsidiary of Vedanta Limited has been marked by significant growth and expansion, but the recent penalties highlight the ongoing challenges in maintaining regulatory compliance in a highly governed industry.