Excerpt from India Infoline Article, Published on Aug 23, 2024.
Hindustan Zinc Ltd (HZL), a leading subsidiary of Vedanta Group, recently faced penalties from both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) due to non-compliance with Securities and Exchange Board of India (SEBI) regulations. Specifically, the company failed to meet the requirement for an adequate number of independent directors on its board, as mandated by Regulation 17(1) of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations.
On August 21, 2024, HZL received formal notices indicating fines of ₹5.37 lakh each from both exchanges. The penalties highlight the company’s ongoing challenges in aligning with SEBI’s governance standards, despite its efforts to include a woman independent director on its board. Currently, HZL’s board consists of three independent directors, but this number has been deemed insufficient according to SEBI’s criteria.
Hindustan Zinc, incorporated on January 10, 1966, has grown into the world’s second-largest producer of zinc, also specializing in lead, silver, and cadmium production. The company, originally a Central Public Sector Undertaking (PSU), was privatized in 2003 during India’s disinvestment program under Prime Minister Atal Bihari Vajpayee. Now a significant player in the global market, HZL’s transition from a PSU to a subsidiary of Vedanta Limited has been marked by substantial growth.
Despite its success, the recent penalties underscore the importance of regulatory compliance in maintaining corporate governance. HZL is currently in discussions with the Ministry of Mines to resolve these issues and meet SEBI’s board composition requirements to avoid further penalties and ensure transparency in its operations.
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