National Stock Exchange Faces Penalty for Not Reconstituting Nomination and Remuneration Committee:

National Stock Exchange Faces Penalty for Not Reconstituting Nomination and Remuneration Committee The Registrar of Companies (ROC), Mumbai, has passed an adjudication penalty order under section 454 of the Companies Act, 2013, against the National Stock Exchange and its directors for violating section 178(8) of the Companies Act, 2013.

Also Read

ROC Penalises Directors for Failing to Hold Board Meetings Since Incorporation

The matter is related to the NSE's failure to properly re-constitutes its Nomination and Remuneration Committee (NRC), violating the provisions of Section 178 of the Companies Act. Section 178(1) of the Companies Act mandates that the Board of Directors of every listed public company must constitute a Nomination and Remuneration Committee (NRC). This committee should have at least three non-executive directors, with at least half being independent directors. As per this section, the company's chairperson can be a member of the committee but cannot chair it. NSE had accepted its default by filing a Suo-Moto Adjudication Application informing that it did not re-constitute the Nomination and Remuneration Committee, chaired by a PID (Public Interest Director), after the tenure of its earlier members had ended. NSE informed that it had applied to SEBI for approval to appoint new Public Interest Directors, but the approval was received around one year after submitting the application. As a result, the NRC was not properly formed until 02.05.2024.

Also Read

ROC Imposes Penalty on Company Over Non-Filing of Form AOC-4

The stock exchange requested the ROC to waive the penalty, claiming that the situation was out of its control as the company had not received approval from SEBI on time. However, the ROC held the company and its directors liable to pay a penalty under Section 178(8) of the Companies Act. The ROC levied a penalty of Rs 5,00,000 on the NSE and Rs 1,00,000 each on its three directors. The penalty imposed on the directors was required to be paid through their own personal sources. The ROC directed the company's officers in default to correct the default and pay the penalty amount within 90 days through the 'e-Adjudication' facility on the MCA Portal.