What Led to GRSE Being Fined by NSE and BSE for Non-Compliance?
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Synopsis
In a recent development, Garden Reach Shipbuilders & Engineers Limited (GRSE) has faced penalties from both NSE and BSE due to failures in corporate governance. The company cites government delays in appointing required directors as the reason for this non-compliance. This article delves into the implications of this situation and GRSE's efforts to rectify the issue.
Key Takeaways
- GRSE received fines from NSE and BSE for governance failures.
- Penalties total Rs 9,77,040 from each exchange.
- Government delays in director appointments cited as the cause.
- GRSE is working with the Ministry of Defence for compliance.
- Importance of corporate governance in public sector enterprises.
Mumbai, Nov 29 (NationPress) Garden Reach Shipbuilders & Engineers Limited (GRSE) announced on Saturday that it has received formal notifications from both the National Stock Exchange (NSE) and the BSE due to failures in adhering to specific corporate governance standards for the quarter that concluded on September 30.
In its regulatory disclosure, the defence public sector entity acknowledged that the exchanges had identified breaches concerning independent directors.
These violations encompass the necessity of having an adequate number of independent directors on the board, the appointment of a woman independent director, and the correct establishment of both the audit committee and the nomination and remuneration committee.
As a result of these deficiencies, each exchange has levied a penalty amounting to Rs 9,77,040, tax included.
"We hereby notify you that the company has received notices dated November 28 from the National Stock Exchange of India (NSE) and BSE Limited (BSE) regarding non-compliance with the provisions of Reg 17 (1), 18 (1) and 19(1)/19(2) of the SEBI LODR, 2015 due to the absence of the required Independent Directors, including a Woman Independent Director on the Board of the Company, and the non-formation of the Audit Committee and Nomination and Remuneration Committee during the quarter ended September 30," the company stated.
"In light of these non-compliances, a penalty of Rs 9,77,040/- (inclusive of GST) has been imposed by both Stock Exchanges, i.e., NSE & BSE," it further noted.
GRSE explained that it has responded to the notices, indicating that as a central public sector enterprise under the Ministry of Defence, appointments to its board—comprising both independent and woman independent directors—are conducted by the Government of India via Presidential Orders.
The company emphasized that the non-compliance arose solely because the government had not timely appointed the necessary directors, a situation that was beyond its control. GRSE has asked the exchanges to consider waiving the penalties.
Furthermore, it stated that it is proactively liaising with the Ministry of Defence, its promoter, to expedite the appointment of the essential independent directors to ensure full compliance with SEBI’s corporate governance standards.
Point of View
I believe GRSE's situation highlights the complexities that public sector enterprises face in governance. The reliance on government appointments can lead to delays that affect corporate compliance. It’s crucial for such organizations to ensure that they adhere to governance standards to maintain investor confidence and transparency.
NationPress
29/11/2025
Frequently Asked Questions
What is the reason behind the fines imposed on GRSE?
GRSE was fined due to non-compliance with corporate governance regulations, specifically regarding the absence of required independent directors and the failure to form necessary committees.
How much is the total fine GRSE has to pay?
Each exchange has imposed a fine of Rs 9,77,040, which includes GST.
What steps is GRSE taking to address the compliance issues?
GRSE is actively engaging with the Ministry of Defence to expedite the appointment of the necessary independent directors.
Who is responsible for appointing the directors at GRSE?
The appointments are made by the Government of India through Presidential Orders.
What are the implications of these fines for GRSE?
The fines can affect GRSE's reputation and may have consequences for investor trust in the company's governance practices.
