IRCTC Board Flags SEBI Fines on Board Composition, Seeks Ministry Intervention

Public sector giant IRCTC attributes SEBI regulation non-compliance to delays in director appointments by Railway Ministry

Mumbai, July 11 – The Indian Railway Catering and Tourism Corporation (IRCTC) has addressed the fines imposed by NSE and BSE for non-compliance with SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations for the March 2025 quarter, stating that the lapses stemmed from external delays beyond company control. The issue primarily relates to the failure to appoint sufficient independent directors, including a mandatory woman director, on its Board and committees.

In a Board meeting held on July 10, 2025, IRCTC reviewed the notices dated May 29 from both exchanges, asserting that the Ministry of Railways, which oversees appointments in the PSU, had been alerted well in advance but was unable to act in time. The company is now urging the ministry to expedite the director nomination process to prevent further compliance breaches.

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NSE & BSE Notices Cited Key SEBI Governance Norms – Board Composition, Audit & NRC

The SEBI LODR fines stem from lapses under three key corporate governance regulations:

• Regulation 17(1) – Composition of the Board of Directors, including appointment of at least one woman director

• Regulation 18(1) – Proper constitution of the Audit Committee

• Regulation 19(1)/(2) – Formation of the Nomination and Remuneration Committee (NRC)

These norms are critical for ensuring board independence, diversity, and oversight of executive remuneration. In government-controlled entities like IRCTC, such appointments require approval from administrative ministries, often causing procedural delays.

“The non-compliance is beyond the company’s control due to dependency on external administrative approvals,” the IRCTC Board said, while affirming that it had notified the Railway Ministry in advance about the gaps.

Proactive Communication Highlighted; IRCTC to Push for Faster Director Appointments

The IRCTC Board emphasized that it had taken proactive measures, including early written communication to the Ministry of Railways, requesting timely appointments to ensure compliance. Still, the final nominations were not made before the quarter-end, resulting in fines from both NSE and BSE.

To avoid repeat violations, the Board has now recommended:

• Regular follow-ups with the Ministry of Railways on pending director nominations

• Prioritizing the appointment of a woman independent director

• Aligning Board composition with the Companies Act, 2013 and SEBI norms

This development underscores the importance of functional independence and gender representation on PSU boards — a key focus for SEBI’s corporate governance reforms.

Regulatory Risk Oversight, Market Reputation in Focus

While the exact amount of the SEBI fines has not been disclosed, market observers suggest that the compliance issue could have reputational implications for IRCTC. As a Navratna PSU and a major listed public sector stock, any governance-related breach draws scrutiny from institutional investors and analysts alike.

Analysts believe the situation, though procedural in nature, highlights the inherent delays in PSU board structuring, and calls for a revamp in nomination timelines, especially as SEBI tightens oversight on listed entities.

The outcome of IRCTC’s escalated communication with the ministry — particularly around the appointment of independent and woman directors — will be crucial ahead of September quarter disclosures, when exchanges are likely to re-assess compliance.

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