Comparative Analysis of Mandatory Committees under SEBI ( LODR) Regulations, 2015 and Companies Act, 2013

• Minimum 3 directors as members 
• 2/3 rd of members shall be independent directors
• In case of entity having outstanding SR Equity shares, it shall consist of only Independent directors 
• Chairperson shall be independent director and must be present at Annual General Meetings of meeting to answer shareholder’s queries 
• Company Secretary shall act as Secretary 

• All members shall be financially literate and 
• At least 1 member shall have accounting or related financial management expertise 

• At least 4 meetings must be held in a year 
• Maximum gap between 2 meetings must not exceed 120 days 

• 2 members or ⅓ rd whichever is higher and at least 2 Independent directors 

• Finance director or head of the finance function
• Heads of internal audit  
• A representative of the statutory auditor 
• Any other such executives to be present at the meetings of the committee. 

Note-

Occasionally it may meet without the presence of any executives of the listed entity.

• Investigate any activity within its terms of reference 
• Seek information from any employee
• Obtain outside legal or other professional advice and 
• Secure attendance of outsiders with relevant expertise, if it considers necessary.

• Composition of Audit Committee must be disclosed in Board Report 
• In case Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed in such report along with the reasons thereof.

• Every Listed Public Company 
• Public Companies having Paid up Share Capital of 10 crore or more
• Public Companies having Turnover of 100 crore or more
• Public Companies having in aggregate outstanding loans,debentures,and deposits exceeding 50 crore 

• Minimum 3 directors 
• Independent directors shall form majority 

(ii)Review and monitor the auditor’s independence and performance, and effectiveness of audit process

(iii)Examination of the financial statement and the auditors’ report thereon

(iv)Approval or any subsequent modification of transactions of the company with related parties.

Additional Provisions related to this clause- (Explained in Proviso to this point) 

• It may provide Omnibus Approval for Proposed transactions with some prescribed conditions.
• It may make recommendations to the Board in case of transactions not referred in Section 188 and in case any transaction not approved by it.
• Above clause shall not apply to any transaction not referred in Section 188 and is between a holding company and its wholly owned subsidiary company. 

Consequence of Non Approval or Non- Ratification of Transaction by company (Explained in Proviso to this clause) 

• If any transaction of amount not exceeding 1 crore Rupees entered by Director or Officer of Company, without taking Audit Committee’s Approval and not ratified within 3 months from transaction date, then- 

It shall be voidable at the option of Audit Committee.

• In case above transaction is with any related party or is authorised by any other director, then concerned director shall indemnify company for such loss. 

(v) Scrutiny of inter-corporate loans and investments

(vi) Valuation of undertakings or assets of the company,wherever it is necessary

(vii) Evaluation of internal financial controls and risk management systems

(viii) Monitoring the end use of funds raised through public offers and related matters.

• To investigate into any matter specified above or referred to it by the Board 
• Power to obtain professional advice from external sources and have full access to information contained in the records of the company to perform its functions.
• May call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors 
• May Review financial statement before their submission to the Board 
• May also discuss any related issues with the internal and statutory auditors and the management of the company. 

• Composition of Audit Committee must be disclosed in Board Report 
• In case Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed in such report along with the reasons thereof.

• Companies which accept deposits from the public;
• Companies which have borrowed money from banks and public financial institutions > 50 crore rupees

• In case company required to constitute Audit Committee – Audit Committee 
• In case of other companies not required to constitute Audit Committee – Board of directors shall nominate a director to play the role of audit committee 

• To provide adequate safeguards against victimisation of employees and directors who avail it.
• To provide for direct access to the Chairperson of the Audit Committee or the director nominated to play the role of Audit Committee in exceptional cases.
• In case of repeated frivolous complaints being filed by a director or an employee, it may take suitable action against the concerned director or employee including reprimand.

• At least 3 directors 
• All shall be non-executive directors and
• At least 50% shall be independent directors
• In case of entity having outstanding SR Equity shares, it shall consist of 2/3rd Independent directors 

• Shall be independent director
• Chairperson of Listed Entity whether executive or non-executive can be member but can’t be Chairperson of this Committee
• May be present at Annual General Meeting to answer Shareholder’s queries, however it shall be upto Chairperson to decide who shall answer the queries 

Higher of 1/3rd 

Or 

2 members 

And 

At least 1 independent director 

• Every Listed Public Company
• Public Companies having Paid up Share Capital of 10 crore or more
• Public Companies having Turnover of 100 crore or more
• Public Companies having in aggregate outstanding loans,debentures and deposits exceeding 50 crore rupees or more

• 3 or more non-executive directors out of which not less than one-half shall be independent directors 
• Chairperson of the company (whether executive or non-executive) may be appointed as a member of the but shall not Chair such Committee.

• Shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down 
• Recommend to the Board their appointment and removal and 
• Specify the manner for effective evaluation of performance of Board, its committees and individual directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance
• Formulate Criteria for determining qualifications,positive attributes and independence of a director
• Recommend to board a policy relating to remuneration for directors,Key Managerial Personnel and other employees.

1. Level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully.

2. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.

3. Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

• Remuneration policy shall be placed on the website of the company, if any
• Salient features of the policy and changes therein, along with web address of the policy shall be disclosed in the Board’s report

• At least 3 directors and at least 1 independent director as members  
• In case of entity having outstanding SR Equity shares, it shall consist of 2/3rd Independent directors 
• Chairperson shall be non-executive director 

• Non-Executive director
• Shall be present in Annual general meetings to answer security holders’ queries. 

•  Shareholders,
•  Debenture-holders,
•  Deposit-holders and
•  Any other security holders at any time during a financial year

• Chairperson who shall be a non-executive director and
• Such other members as may be decided by the Board.
• The Chairperson or, in his absence, any other member of the committee authorised by him in this behalf shall attend the general meetings of the company.

Minimum- 1 Lakh Rupees

Maximum- 5 Lakh Rupees

Minimum- 25,000 Rupees

Maximum- 1 Lakh Rupees 

               Or

Imprisonment

Maximum – 1 year 

               Or Both 

• Shall be constituted by Board of Directors
• Majority members shall be members of Board of Directors 
• In case of entity having outstanding SR Equity shares, it shall consist of 2/3rd Independent directors 
• Chairperson shall be a  member of Board of Directors
• Senior Executives may be members of the Committee 

• Board of directors shall define the role and responsibility of the Risk Management Committee 
• May delegate monitoring and reviewing of the risk management plan to the committee and 
• Such other functions as it may deem fit ( specifically include Cyber security). 

• Net worth of 500 crore rupees or more or
• Turnover of 1000 crore rupees or more or
• Net Profit of 5 crore Rupees or more

During immediately preceding financial year

• 3 or more directors out of which at least 1 shall be independent director
• In case company not required to appoint independent director u/s 149(4) ,it shall consist of 2 or more directors
• In case of private company having 2 directors, it shall consist of 2 directors
• In case of foreign company,it shall consist of at least 2 persons of which-

• 1 Person shall be Indian Resident authorised to accept documents and notices on behalf of foreign company
• Other Person shall be nominated by foreign company 

1. Formulate and recommend to the Board, a CSR Policy indicating the activities to be undertaken by the company in areas or subject, specified in  Schedule VII

2. Recommend the amount of expenditure to be incurred on the activities referred to in (1) and

3. Monitor the Corporate Social Responsibility Policy of the company from time to time

• After taking Committee’s recommendations approve CSR Policy
• Ensure that activities included in CSR policy are undertaken by company 

• Board shall disclose CSR Committee Composition in Board Report 
• Board shall disclose contents of such Policy in its report and also place it on the company’s website, if any in prescribed manner