Section A: Disclosure in Limited Review Results regarding nonappointment of independent directors, etc. as per Companies Act 2013 and listing agreement
Compiler’s Note
Sections 149, 177 and 178 of the Companies Act, 2013 as well as Clause 49 IIIB of the listing agreement require companies to have a minimum number of independent directors. There are several PSUs where the respective ministry of the Government of India has not appointed / re-appointed the required number of independent directors since several months. Following are 2 instances of listed PSUs where the auditors have given observations in the quarterly limited review reports for same.
Dredging Corporation of India Ltd . (period ended 30th Sept., 2015)
From Notes below unaudited quarterly results
8. Statutory Auditors have qualified in their limited review report as under:
Quote: The Company had not complied with the provisions of section 135, 149(1), 149(4), 177 and 178 of the Companies Act, 2013. At this stage, we are unable to comment on the consequential impact of non-compliance of these provisions if any.
9. Company’s Reply to Statutory Auditor’s Qualification is as under:
The Company is a Government of India Undertaking and as per the Articles of Association of the Company, the Directors are to be appointed by the President of India. The issue of appointment of requisite number of independent directors, women director, has been taken up with the administrative Ministry – Ministry of Shipping and the same is pending with them. Constitution of different committees as required under the Act will be taken up after the appointment of the said Directors by the Ministry of Shipping. The said qualification has no impact on the profit of the Company for the year.
From Limited Review Report
4. Basis for qualified conclusion
The company had not complied with the provisions of section 135, 149(1), 149(4), 177 and 178 of the Companies Act, 2013. At this stage, we are unable to comment on the consequential impact of noncompliance of these provisions if any.
5. Based on our review conducted as above, subject to effect of the non compliance of provisions of the Companies Act, 2013 as mentioned in para 4, nothing has …..
Hindustan Petroleum Corporation Ltd . (period ended 30th Sept., 2015)
From Limited Review Report
Emphasis of Matter
4. Without qualifying our review report, we refer to Note to the Statement relating to review and recommendation of the financial results to the Board of Directors by the Audit Committee of the Company. The Company has only one independent director. The Audit Committee consisting of only one Independent Director recommended the results to the Board of Directors of the Company. However, as per clause 49 III B of the Listing Agreement, minimum two independent members should be present to form quorum of the Audit Committee and accordingly, the said meeting had no requisite quorum in terms of the provision of the Listing Agreement.
