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Companies Act

Mandatory Board Committees under Companies Act and SEBI

August 3, 2020 by Team Instabizfilings

Blog Details

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.


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