The government has appointed three independent directors, including former RBI Deputy Governor Ms Usha Thorat, on the board of Oil and Natural Gas Corp (ONGC), paving the way for sale of shares in the state-owned firm.
“Ministry of Petroleum and Natural Gas vide letter dated June 20 has appointed Ms Thorat, Prof Deepak Nayyar (ex-Vice Chancellor of the Delhi University) and (former Finance Secretary) Mr Arun Ramanathan as non-official part-time directors on the board of the company,” ONGC said in a statement here.
With this, ONGC now meets market regulator SEBI’s listing requirement of having equal number of executive and non-executive directors, paving the way for the follow-on public offer (FPO).
ONGC said the appointment of three directors has also been approved by the company Board of Directors.
A senior company official said 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.
ONGC might convene a board meeting sometime next week to approve the red herring prospectus (RHP) for the share sale and the same is likely to be filed with SEBI before month end.
The share sale was originally planned to happen in 2010-11 but was deferred to April 5 as the company did not have adequate number of independent directors on its board to meet the capital market regulator SEBI’s listing norm.
The planned launch of the FPO on July 5 was also deferred due to the same reason. ONGC has six functional directors, besides the chairman.
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 the 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, the official said.
Post-FPO, the government’s stake in ONGC would come down to 69.14 per cent from existing 74.14 per cent.
ONGC in February had received the report of independent auditors, who certified the company’s oil and gas reserves, a mandatory requirement for explorers making public offers.
Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc and Morgan Stanley are managing the FPO.