Mandatory Board Committees under Companies Act and SEBI

August 3, 2020 by Team Instabizfilings

BOARD COMMITTEES

A board committee is a small working group consisting of board members, for the purpose of supporting the board’s work. They perform expertise work and members of committee are expected to have expertise in the specified field. It improves board effectiveness and efficiency, in areas where more focused, specialized and technical discussions are required. It enables better management of full board’s time and allow in-depth scrutiny and focused attention.

Mandatory committees under Companies Act, 2013 given below

1. Audit Committee

2. Nomination Committee

3. Stakeholders Committee

4. Corporate Social Responsibility Committee

Mandatory committees under SEBI (LODR) Regulations, 2015 are given below

1. Audit Committee

2. Nomination Committee

3. Stakeholders Committee

4. Risk Management Committee

Particulars	Audit Committee	Nomination Committee	Stakeholders Committee	Corporate Social Responsibility Committee
Applicability	All Listed Companies, For Public Company, Paid up capital ≥ 10 crore or Turnover ≥ 100 crore or Loans or Borrowings > 50 crore	All Listed Companies, For Public Company, Paid up capital ≥ 10 crore or Turnover ≥ 100 crore or Loans or Borrowings > 50 crore	All Listed Companies, and for other companies whose Number of shareholders or debenture holders ≥ 1000	Net worth > 500 crore rupees Turnover > 1000 crore rupees Net profit > 5 crore rupees
Members	Atleast 3 directors	Atleast 3 Non-executive directors	Atleast 3 directors	Atleast 3 directors For Private companies ≥ 2
Independent Directors	For Listed Entity [Atleast two-third] For other companies[[Majority of the total number of members]	For Listed Entity and other companies [Atleast 50%]	No such condition is required	Atleast 1
Chairperson	For Listed Entity [Independent director]	Independent Director and shall not chair any other committee	Non-executive and can be Independent Director or not	No such Condition
Presence at AGM	Chairperson	Chairperson may be present	Chairperson	No such Condition
Act, Section and Rules	Companies Act 2013, Section 177, Companies (Meetings of Boards and its Powers) Rules 2014, SEBI (LODR) Regulations 2015	Companies Act 2013, Section 178, Companies (Meetings of Boards and its Powers) Rules 2014, SEBI (LODR) Regulations 2015	Companies Act 2013, Section 178(5), Companies (Meetings of Boards and its Powers) Rules 2014, SEBI (LODR) Regulations 2015	Companies Act 2013, Section 135, Companies (Corporate Social Responsibility Policy ) Rules 2014, Not mandatory under SEBI (LODR) Regulations
Non Applicability	For Unlisted Public Company [Joint Venture, Wholly Owned Subsidiary, and Dormant Company]	For Unlisted Public Company [Joint Venture, Wholly Owned Subsidiary, and Dormant Company]	No such Criteria	No such Criteria
Number Of Meetings	For Listed Entity [Atleast 4 meetings in a year and gap between two meetings should be more than 120 days] For other Companies [As desirable to serve it Purpose]	For Listed Entity [Atleast once in a year] For other Companies [As desirable to serve it Purpose]	For Listed Entity [Atleast once in a year] For other Companies [As desirable to serve it Purpose]	As desirable to serve its purpose
Quorum	For Listed Entity [2 members or one-third of total members whichever is greater with minimum 2 independent directors] For other Companies [As decided by BOD]	For Listed Entity [2 members or one-third of total members whichever is greater with minimum 1 independent directors] For other Companies [As decided by BOD]	As decided by BOD	As Decided by BOD
Purpose	1) It examines financial statement and auditor’s report 2)Boost confidence in the integrity of company financial reporting, internal control process and risk management process 3)It review auditor’s performance, independence and audit process, etc.	1) It helps in election of members of BOD 2) Handling matters related to employment and remuneration of senior management and personnel’s remuneration and incentive schemes 3) Devising a policy on diversity of BOD, etc.	1) To resolve grievances of security holders 2) To review service render by Registrar and Share Transfer Agent, etc.	1) To formulate CSR Policies 2) To recommend amount of expenditure to be incurred for CSR activities 3) To monitor CSR Policy 4) To institute a transparent monitoring mechanism for implementation of CSR Projects, programs or activities undertaken by the company, etc.

Particulars	Risk Management Committee
Applicability	Top 500 Listed Entities
Members	Board of Directors and Senior executives and majority consist of Board Members
Independent Directors	No such Criteria
Chairperson	Shall be member of BOD
Presence at AGM	No such condition
Act, Section and Rules	SEBI (LODR) Regulations, 2015, There is no requirement for formation of risk management committee under Companies Act, 2013
Non Applicability	Other than Top 500 Listed Companies
Number Of Meetings	For Listed Entities [Atleast once in a year]
Quorum	As decided by BOD
Purpose	1) Monitoring and reviewing process and procedure of risk management and risk mitigation 2)Framing and implementation of risk management policy, etc.