The word committee has not been specifically defined under the Companies Act, 2013.
But as per Merriam-Webster Dictionary a committee is:
“a body of persons delegated to consider, investigate, take action on, or report on some matter” . From the said definition we can opine that a committee is like an advisory panel which puts forth its finding/recommendation before the Main Board.
As the business grows, the compliance related to the companies also increases and hence it is not possible for the management to look into every aspect of the Company where expert advice is required. The role of the Committees is to report effectiveness and efficiency, in areas where more focused, specialized and technical discussions are required. Committee allows in depth scrutiny and focused attention.
Committees comprise of Board Members along with experts in such field for which the Committee has been formed. However, the Board of Directors are ultimately responsible for the acts of the committee. Board is responsible for defining the committee role and structure.
COMMITTEES AS PER COMPANIES ACT, 2013
1. AUDIT COMMITTEE
Such companies are required to constitute an Audit Committee with minimum of 3 Directors of which majority shall be Independent Directors, if any. Specialized person from a finance background is recommended to become a member in such Committee.
2. NOMINATION & REMUNERATION COMMITTEE
Such companies are required to constitute a Nomination & Remuneration Committee with minimum of 3 Non-Executive Directors of which majority shall be Independent Directors, if any.
3. STAKEHOLDERS RELATIONSHIP COMMITTEE
To consider and resolve the grievances of security holders of the company.
4. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In any financial year.
Any other form of Company which is not required to constitute such committee, can voluntarily constitute such committee.
COMMITTEE UNDER PREVENTION OF SEXUAL HARASSMENT
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”) was enacted as a comprehensive legislation to provide a safe, secure and enabling environment, free from sexual harassment to every woman.
Is required to constitute an Internal Complaint Committee (ICC) constituting a women employee from senior level, not less than 2 employees committee to this cause who can be either social worker or having legal knowledge and one external member of non governmental organizations or associations committed to the cause of women or a person familiar with the issues relating to sexual harassment
NOTING Of COMMITTEES MEETINGS UNDER BOARD MEETINGS
BOARDS REPORT TO INCLUDE DETAILS OF COMPOSITION OF COMMITTEES
The Boards report shall include the constitution of such committee and the details of committee meetings thereof.
The author can be reached at [email protected]
Disclaimer: This article is written merely for informational purposes and it should not be taken as a legal advice. The readers are advised to consult competent professionals before acting on the basis of any information provided here.