India has over fifty Central Public Sector Enterprises listed on domestic stock exchanges. Each of them operates under SEBI’s Listing Obligations and Disclosure Requirements – the same framework that governs every private listed company. Each of them is expected to maintain board composition standards, constitute mandatory committees, and demonstrate governance discipline to public investors.
And yet, not one of them can appoint its own Independent Directors.
That structural fact sits at the centre of the episode currently unfolding at Hindustan Copper Limited, and it raises questions that go well beyond one company’s regulatory filing.
The Facts as Disclosed
Hindustan Copper Limited was fined ₹9.558 lakh by BSE and NSE for the quarter ended March 31, 2026. The breach cited: Regulations 17(1), 18(1), and 19(1)/ (2) of SEBI’s LODR framework. The cause: five vacant Independent Director positions, which left the Audit Committee and the Nomination & Remuneration Committee unable to meet their mandated independent composition.
As a CPSE, Independent Director appointments at Hindustan Copper are made by the President of India through the administrative ministry here, the Ministry of Mines. The company has written repeatedly to the Ministry requesting expedited action. The board, at its meeting of June 12, 2026, directed management to seek relief under the Uniform Carve Out Policy.
The company has been penalised. The Ministry has not been questioned.
An Accountability Architecture with a Structural Blind Spot
India’s corporate governance framework for listed entities is well-constructed in the abstract. SEBI’s LODR regulations impose meaningful obligations on boards, independent oversight through audit and nomination committees, minimum director composition thresholds, disclosure standards that give public investors line of sight into board functioning.
But the framework carries a structural blind spot when applied to listed CPSEs: it places compliance obligations on entities that do not control all the variables required for compliance.
A private listed company that fails to appoint Independent Directors in time is making a choice and bears full accountability for it. A listed CPSE that fails to appoint Independent Directors is waiting on an administrative process it cannot initiate, accelerate, or complete. The regulatory consequence, the fine — is identical. The cause is categorically different.
Corporate governance demands more application, not less, from government-run institutions when it comes to the implementation of SEBI LODR directives. The governance standards set by the regulator are not advisory for PSUs they are binding. And the obligation to enable compliance flows upward to the appointing ministry with equal binding force.
That principle is not currently operationalised anywhere in the framework. It needs to be.
The Carve-Out Policy: A Structural Admission
The Uniform Carve Out Policy exists because SEBI and the government have jointly acknowledged at least implicitly that listed CPSEs occupy a structurally distinct position with respect to board appointments. When compliance cannot be achieved because the appointing authority has not acted, a standing relief provision grants temporary regulatory cover.
The problem is temporal drift. The carve-out was designed as a bridge over an exceptional administrative delay. In practice, it has become the standard response to a recurring structural gap. That is not what a relief provision is for.
Every carve-out invocation should trigger, automatically, an escalation to the administrative ministry with a mandatory response timeline. It should require public disclosure of the vacancy age, the number of ministry-directed requests made by the company, and the ministry’s committed appointment date. Absent a ministry commitment, the carve-out relief should not be unconditionally granted.
These are not radical proposals. They are the minimum accountability conditions that a governance-serious framework would already carry.
What Investors Are Actually Carrying
For the investor tracking Hindustan Copper, the ₹9.558 lakh fine is not the metric to watch. The metric is the governance condition of the board during the vacancy period.
An Audit Committee without its full mandated independent composition cannot discharge its oversight mandate at peak effectiveness. Its ability to scrutinise related-party transactions, review auditor independence, and interrogate management representations is structurally constrained. A Nomination & Remuneration Committee below threshold cannot credibly discharge its function as an independent check on executive appointments and compensation.
These are not hypothetical risks. They are active governance deficits that every institutional investor in a CPSE with vacant Independent Director seats is currently pricing or more often than not pricing into their assessment.
The broader question for the investor community: across India’s fifty-plus listed CPSEs, how many boards currently have pending Independent Director vacancies of more than one quarter’s duration? That data is not easily aggregated today. It should be.
A Concrete Policy Reform Agenda
Three changes would materially close the accountability gap this episode exposes.
First, SEBI should require all listed CPSEs to disclose in their quarterly compliance filings the duration of every pending Independent Director vacancy and the number of formal requests addressed to the administrative ministry. This data should be machine-readable and publicly accessible on exchange platforms.
Second, the Uniform Carve Out Policy should be amended to require a documented ministry response, including a committed appointment timeline, as a precondition for relief. A company’s letter to the ministry is not sufficient. The ministry’s binding response to that letter must be on record.
Third, the Department of Public Enterprises or an appropriate oversight body hould publish an annual report on Independent Director appointment timelines across all listed CPSEs, with ministry-level performance data. Administrative accountability requires visibility.
The Larger Issue
India’s listed PSU ecosystem attracts institutional investors, retail shareholders, and foreign portfolio capital. It does so on the strength – implicit and explicit -of the governance standards that SEBI’s framework provides. When the framework is structurally unable to enforce those standards against its own administrative architecture, that implicit strength is compromised.
Hindustan Copper’s five empty board chairs are not, in isolation, a crisis. Across fifty listed CPSEs, multiplied by recurring appointment delays, multiplied across the tenure of vacancies they become a systemic governance risk that is not currently visible, not currently measured, and not currently acted upon.
That is an institutional problem worth naming. And worth fixing.
About the Author : Colonel M V Shashidhar (Retd) is a Defence & Strategic Affairs Expert, Certified Independent Director (IICA), ESG Advocate and Governance Thought Leader.
