Clearing the decks for the follow-on-public offer (FPO), the Central Government on Tuesday announced the appointment of three independent directors, including former RBI Deputy Governor Usha Thorat, on the Oil and Natural Gas Corporation (ONGC) board.
The Ministry of Petroleum and Natural Gas has appointed Ms. Thorat, former Delhi University Vice-Chancellor, Deepak Nayyar and former Finance Secretary, Arun Ramanathan, as non-official part-time directors on the board of the company,” the June 20 letter said. This new development has enabled ONGC to meet Securities and Exchange Board of India (SEBI)'s listing requirement of having equal number of executive and non-executive directors, something that could pave the way for the FPO. However, the timing of the public offer will be decided by the Department of Disinvestment.
The public offer in which the government plans to sell 5 per cent (427.77 million shares) was scheduled to open on July 5 and close on July 8. But since the appointment of independent directors got delayed, the FPO will be pushed back by at least two weeks. The share sale was originally planned to happen in 2010-11 but was deferred to April 5, 2011 as the company did not have adequate number of independent directors on its board to meet SEBI's listing norm. The planned launch of the FPO on July 5 was also deferred due to the same reason. It also has two government-appointed nominee directors, taking the total strength of functional/promoter directors to nine. In comparison, it has five independent directors and needs four more to meet SEBI's listing norm. But since the company does not have a full-time Chairman and Director (Human Resources), appointment of three directors would help ONGC meet SEBI norm, officials in the Ministry said.
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