HMT Limited has filed an application with the Ministry of Corporate Affairs to strike off its wholly owned subsidiary HMT Watches Limited from the records of the Registrar of Companies. The application was submitted under Section 248 of the Companies Act, 2013, marking a significant step in the company's restructuring process.

Background and Regulatory Approval

The striking off process stems from an earlier decision by the Cabinet Committee on Economic Affairs (CCEA). In its meeting dated January 6, 2016, the CCEA approved the closure of three subsidiary companies of HMT Limited. The subsidiaries identified for closure included HMT Watches Limited, HMT Bearings Limited, and HMT Chinar Watches Limited.

Current Development

After completing the requisite formalities over the years, HMT Limited has now moved forward with the formal striking off process for HMT Watches Limited. The application represents the culmination of procedural requirements that needed to be fulfilled before approaching the Ministry of Corporate Affairs for the subsidiary's removal from official records.

Regulatory Compliance

The announcement was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. HMT Limited has been keeping stock exchanges informed at various stages regarding the status of the subsidiary closure process since the initial CCEA approval.

Company Information

HMT Limited, a Government of India undertaking, is headquartered at HMT Bhavan, Bellary Road, Bengaluru. The company trades on both BSE (scrip code: 500191) and NSE (scrip symbol: HMT) and continues its operations while streamlining its subsidiary structure through this striking off process.

HMT Limited , a government-owned company, has been slapped with fines totaling Rs 12.17 lakh by India's two major stock exchanges for non-compliance with key regulatory requirements. The fines highlight the importance of adherence to corporate governance norms, even for state-owned enterprises.

Regulatory Non-Compliance

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have each imposed a fine of Rs 6.09 lakh (inclusive of GST) on HMT Limited. The penalties were levied for non-compliance with Regulation 17(1), 18(1), and 19(1)/19(2) of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

Nature of Non-Compliance

The non-compliance pertains to the quarter ended September 30, and involves three key areas:

1. Composition of the Board of Directors
2. Constitution of the Audit Committee
3. Constitution of the Nomination and Remuneration Committee (NRC)

The company lacked the requisite number of Independent Directors on its Board of Directors and in its Audit Committee and NRC up to July 14.

Company's Response

HMT Limited has stated that it is in the process of applying for a waiver of the imposed fines. The company cited its status as a Government Company, where all directors are appointed by the Government of India as per the company's Articles of Association.

Steps Towards Compliance

To address the non-compliance, HMT Limited has taken the following steps:

1. Requested the Administrative Ministry to appoint the required number of Independent Directors.
2. Specifically asked for the appointment of one Independent Woman Director to the Board of Directors.

These appointments are crucial for the company to comply with the aforementioned SEBI regulations.

Implications for Investors

This incident underscores the importance of robust corporate governance, even in government-owned entities. Investors should be aware that:

1. Non-compliance with regulatory norms can result in financial penalties.
2. Government companies may face unique challenges in board composition due to their appointment processes.
3. Timely compliance with SEBI regulations is crucial for maintaining investor confidence.

As HMT Limited works towards resolving these compliance issues, investors and market watchers will be keenly observing the company's progress in reconstituting its board and key committees in line with regulatory requirements.