REC Ltd has submitted a request to the National Stock Exchange and BSE to waive fines levied for failing to maintain the required composition of its Board and Committees during the quarter ended June 30, 2026. The company attributes this non-compliance to its status as a government entity, where the authority to appoint directors rests with the President of India through the Ministry of Power.

Regulatory Notice and Board Response

The exchanges issued notices on August 25, 2026, highlighting REC's failure to comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Specifically, the company did not meet the stipulated requirements for the number of Independent Directors on its Board. In response, REC's Board of Directors reviewed the matter in a meeting held on September 19, 2026.

The Board noted the position of non-compliance and the associated fines. It directed management to engage in regular follow-up with the Ministry of Power, Government of India, to expedite the appointment process for the requisite number of Independent Directors.

Grounds for Waiver Request

REC argues that as a Government Company, its Articles of Association vest the power to appoint Independent Directors exclusively with the President of India, acting through the administrative ministry. The company stated it has no role in these appointments, making the non-compliance beyond its direct control.

Key points from the submission include:

• The power to appoint Independent Directors is vested with the President of India via the Ministry of Power.
• REC has no role in the selection or appointment of these directors.
• Fines imposed by stock exchanges should be waived given the lack of corporate control over the compliance issue.

Compliance Framework and Waiver Process

The exchanges referenced SEBI Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026, which outlines the standard operating procedure for imposing fines and suspending trading in cases of non-compliance. To apply for a waiver, companies must adhere to specific procedural requirements outlined by the exchanges.

The exchanges emphasized that compliance is a prerequisite for applying for a waiver. Applications for non-compliant companies will not be processed until the regulatory breach is rectified. Additionally, if a company is non-compliant under multiple regulations, it must file a single application detailing all respective regulations and quarters involved.

What the Numbers Show

The core tension in this filing lies in the structural disconnect between regulatory obligations and governance control. While SEBI mandates strict board composition for listed entities to ensure independent oversight, REC's governance structure places the appointment mechanism entirely outside the company's operational purview. This creates a scenario where the listed entity bears financial penalties for delays caused by a sovereign administrative process, highlighting a potential friction point in the regulation of Public Sector Undertakings (PSUs) versus private listed firms.

REC has completed the sale and transfer of its subsidiary, Balsane Power Transmission Limited, to Resonia Limited. The transaction was executed on September 28, 2026, for a consideration of ₹5.59 crore.

Transaction details

The deal involves the transfer of the entire shareholding of Balsane Power Transmission Limited, comprising 50,000 equity shares. The seller was REC Power Development and Consultancy Limited (RECPDCL), a wholly owned subsidiary of REC. With the receipt of necessary consideration, the project-specific special purpose vehicle (SPV) ceases to be a subsidiary of both RECPDCL and REC.

The following table summarises the key parameters of the transfer:

The consideration of ₹5,59,19,024 is inclusive of taxes, professional fees, and reimbursement of expenses. The successful bidder was selected through a tariff-based competitive bidding process. The Share Purchase Agreement (SPA) was executed between RECPDCL and Resonia Limited on September 28, 2026.

Regulatory and structural implications

The transaction does not fall within the purview of related party transactions, as Resonia Limited does not belong to the promoter or promoter group. Furthermore, the sale is not in the nature of a slump sale. The consideration was determined in accordance with guidelines issued by the Ministry of Power, Government of India.

The contribution of Balsane Power Transmission Limited to the turnover, revenue, income, and net worth of the listed entity during the last financial year was reported as negligible. Consequently, the disposal does not materially impact REC's financial statements. The SPV has been transferred along with all its assets and liabilities.