REC Limited has released its Annual Secretarial Compliance Report for the financial year ending March 31, 2026. The report highlights the company’s adherence to corporate governance standards, noting specific challenges regarding board composition and independent director vacancies. REC has clarified that as a government entity, appointments remain under the purview of the Ministry of Power, and the company continues to work proactively to bridge existing gaps in compliance.
Board Composition and Governance Status
The latest compliance report indicates that during the financial year 2025-2026, REC Limited faced challenges in maintaining the required strength of independent directors on its board. Specifically, from April 1, 2025, to April 16, 2025, the company did not meet the mandatory thresholds for independent representation, nor did it maintain the required quota for a woman independent director or the two-thirds composition requirement for the Audit and Nomination & Remuneration Committees.
Regulatory Response and Penalties
Due to these gaps, the National Stock Exchange and BSE Limited imposed fines across several quarters of 2025, including ₹6,17,140 for the quarter ended September 30, 2025, and ₹5,54,600 for the quarter ended December 31, 2025. These penalties were attributed to the failure to fill vacancies resulting from the expiration of director tenures within the stipulated timeframes.
Management Stance on Compliance
Management has addressed these observations by emphasizing that, as a government-owned enterprise, the power to appoint directors rests with the President of India through the Ministry of Power. REC Limited maintains that it has no direct authority over these appointments. The company continues to actively follow up with the Ministry and its holding company, Power Finance Corporation Limited, to expedite the nomination of the required number of independent directors to ensure full adherence to governance best practices.
Operational Compliance Highlights
Beyond the specific issues regarding board composition, the report confirms that REC Limited remains fully compliant with other operational mandates. This includes maintaining a functional, transparent website, ensuring proper disclosure of non-material subsidiary status, conducting internal audits, and adhering to strict protocols regarding related-party transactions and insider trading policies. The company reports no instances of statutory auditor resignations throughout the 2026 fiscal year.
Source: BSE
