REC Faces ₹5.4 Lakh Fine from Stock Exchanges Over Board Composition Lapses

REC Limited, a Maharatna public sector enterprise under the Ministry of Power, has officially informed the stock exchanges that its Board has taken note of substantial fines levied against the company for non-compliance with corporate governance norms.

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) had imposed a combined fine of ₹5,42,800 on REC for failing to maintain the required composition of its Board of Directors during the quarter ended September 30, 2025.

The Core Issue: A Shortage of Independent Directors

The violation pertains to Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The exchanges noted that REC was non-compliant for 92 days in the quarter, attracting a daily fine of ₹5,000, which accumulated to the current amount.

REC's Defence: "Beyond Our Control"

In its letter to the exchanges dated January 19, REC's Board, which discussed the matter in its December 31, 2025 meeting, has pushed back. The company argues that the appointment of Independent Directors is not within its power.

Being a Government of India enterprise, the power to appoint Independent Directors to REC's Board is vested with the President of India, acting through the administrative Ministry of Power. REC stated it has "no role in the appointment of Directors" and that the delay is "beyond the control of the Company."

The Board has directed management to make "regular follow-up" with the Ministry of Power to expedite the appointments. Crucially, REC has requested the exchanges to waive the fines and not impose any further penalties, citing the absence of any fault on the company's part.

What's at Stake?

The exchanges' notices, dated November 28, 2025, warned of severe consequences for non-payment and continued non-compliance, including:

Freezing the entire shareholding of the promoter (Government of India) in REC and other securities.
Shifting REC's shares to the trade-for-trade segment (Z category) if the lapse continues for a second consecutive quarter.

The Path Forward

REC has submitted the Board's comments as required by the exchanges. The ball is now in the court of the NSE and BSE to decide on REC's waiver request. Simultaneously, pressure mounts on the Ministry of Power to finalize the appointments and bring the Maharatna company back into compliance with SEBI's governance standards.

The episode highlights the unique challenges faced by listed Public Sector Undertakings (PSUs) where key governance appointments are subject to government processes, potentially conflicting with market regulator deadlines.

About REC Limited: REC is a leading 'Maharatna' NBFC focusing on financing power infrastructure projects across India.