Government votes out three independent Coal India Limited directors

KOLKATA: The NDA government has voted out three remaining independent directors of Coal India’s board. With three other directors having already resigned in the last 15 days, there are no independent directors in the company at present.

With this, the board has lost its power to pass accounts, or take any large investment decisions.

The independent directors who were not allowed reappointment are RN Trivedi, Noor Mohammad and Indranil Manna. Their reappointment came up for voting at the company’s annual general meeting on Wednesday. The state-owned CIL conducted a mix of electronic and paper ballot to pass a resolution about their reappointment.

It will also become difficult for the largest coal producer to conduct foreign roadshows ahead of a stake sale. The cabinet committee for economic affairs ( CCEA) decided on Wednesday to divest 10% in the company. Corporate governance norms require 50% of directors to be independent in any company board.

“Foreign investors are bound to question the adherence to corporate governance norms if the company does not fill up the 8 vacant positions at the board very soon. The chairman's post also remains vacant along with the posts of seven directors,” a senior CIL official told ET on the condition of anonymity.

All six independent directors of CIL were appointed by the previous government. Three independent directors have recently resigned and their resignations are being seen as part of the NDA government’s move to remove those appointed during the UPA government’s regime. “The government holds 90% in the company and all six directors were appointed by the previous government. The government voted against the reappointment of the remaining three. This took away the board’s ability to take decisions until a set of seven new directors are appointed,” a senior CIL official said.

While, Alok Perti and C Balakrishnan resigned this week, another independent director Shri Prakash put in his papers the previous week.