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
- Every listed public Company
- Public limited Company having
- Paid up capital of 10Crores or more; or
- Turnover of 100Crores or more; or
- Having in aggregate, outstanding loans or borrowings or debentures or deposits of 50Crors or more;
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.
Role:
- Recommends the appointment, remuneration and terms of appointment of auditors of the company,
- call for the comments of the auditors about internal control systems,
- evaluation of internal financial controls and risk management systems
- evaluation of internal financial controls and risk management systems
- Any other form of Company which is not required to constitute such committee, can voluntarily constitute such committee.
2. NOMINATION & REMUNERATION COMMITTEE
- Every listed public Company
- Public limited Company having
- Paid up capital of 10Crores or more; or
- Turnover of 100Crores or more; or
- Having in aggregate, outstanding loans or borrowings or debentures or deposits of 50Crors or more;
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.
Role:
- Identify persons who can be appointed as Directors and in Senior Management
- Also removal of any Directors or KMP and grounds thereon.
- To specify Board effective evaluation of its performance.
- Formulating the criteria for determining qualifications, positive attributes and independence of a director/KMP/employee
- Recommending Policy for remuneration of Directors/KMPs/Employees
3. STAKEHOLDERS RELATIONSHIP COMMITTEE
- Company having shareholders/ debenture holders/ deposit holders or other security holders of more than 1000
- Such companies are required to constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non-executive director and such other members as may be decided by the Board.
Role:
To consider and resolve the grievances of security holders of the company.
4. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
- Every Company Having net worth of 500 Crores or more; OR
- Every Company Having turnover of 1000 Crores or more; OR
- Every Company Having net profits of 5 Crores or more
In any financial year.
Any other form of Company which is not required to constitute such committee, can voluntarily constitute such committee.
Role:
- Recommend CSR Policy
- Amount of expenditure
- Monitoring its projects and programs.
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.
- Every establishment whether organized sector or unorganized sector where 10 or more employees are working
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
Role:
- Implementation of policies relating to prevention of sexual harassment
- Resolving Complaints of the aggrieved
- Recommending actions to be taken.
NOTING Of COMMITTEES MEETINGS UNDER BOARD MEETINGS
- All the recommendations reported by the Committee shall be noted in the Meeting of the Board of Directors next preceding the Committee meetings.
- The minutes of such Committee meetings shall be prepared separately and kept at the office of the Company.
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.
Author Bio
