Introduction: SEBI (Securities and Exchange Board of India) introduced the LODR (Listing Obligations and Disclosure Requirements) Regulations in 2015 to enhance corporate governance practices among listed entities. These regulations mandate the establishment of various board committees, each with specific compositions, roles, and responsibilities. This article delves into the key committees defined by SEBI LODR Regulation 2015: Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, and Risk Management Committee.
Board Committees as per SEBI LODR Regulation 2015
|
Audit Committee |
Nomination & Remuneration Committee | Stakeholders Relationship Committee | Risk Management Committee | |
| Composition | 1. The committee shall comprise of at least three directors.
2. At least Two thirds of the members of audit committee shall be independent directors. 3.In case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors. 4. All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise. |
1.The committee shall comprise of at least three directors.
2. All directors of the committee shall be nonexecutive directors. 3. At least two thirds of the directors shall be independent directors. |
1.The committee shall comprise of at least three directors.
2. The committee shall have at least one independent director. 3. In case of a listed entity having outstanding SR equity shares, at least two thirds of the Stakeholders Relationship Committee shall comprise of independent directors. |
1. The Risk Management Committee shall have minimum three members with majority of them being members of the board of directors, including at least one independent director.
2. In case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk Management Committee shall comprise independent directors. |
| Role of Committee | 1.The role of the audit committee and the information to be reviewed by the audit committee shall be as specified in Part C of Schedule II. | 1. The role of the nomination and remuneration committee shall be as specified as in Part D of the Schedule II. | 1. The role of the Stakeholders Relationship Committee shall be as specified as in Part D of the Schedule II. | 1.The role and responsibilities of the Risk Management Committee shall mandatorily include the performance of functions specified in Part D of Schedule II.
2. The board of directors shall define the role and responsibility of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit (such function shall specifically cover cyber security). |
| Chair-person | 1. The chairperson shall be an independent director.
2. The Chairperson shall be present at Annual general meeting to answer shareholder queries. |
1.The Chairperson shall be an independent director .
Provided that the chairperson of the listed entity, whether executive or nonexecutive, maybe appointed as a member of the Committee and shall not chair such Committee. 2. The Chairperson of may be present at the annual general meeting, to answer the shareholders’ queries. However, it shall be up to the chairperson to decide who shall answer the queries. |
1.The chairperson of this committee shall be a non-executive director.
2. The Chairperson of the Stakeholders Relationship Committee shall be present at the annual general meetings to answer queries of the security holders. |
1. The Chairperson of the Risk management committee shall be a member of the board of directors and senior executives of the listed entity may be members of the committee. |
| Meetings | 1. The committee shall meet at least four times in a year and not more than one hundred and twenty days shall elapse between two meetings. | 1.The committee shall meet at least once in a year. | 1. The committee shall meet at least once in a year. | 1. The committee shall meet at least twice in a year. |
| Quorum | 1.The quorum for audit committee meeting shall either be two members or one third of the members of the audit committee, whichever is greater, with at least two independent directors. | 1. The quorum for a meeting of the nomination and remuneration committee shall be either two members or one third of the members of the committee, whichever is greater, including at least one independent director in attendance. | — | 1.The quorum for a meeting of the Risk Management Committee shall be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance.
2. The meetings of the risk management committee shall be conducted in such a manner that on a continuous basis not more than one hundred and eighty days shall elapse between any two consecutive meetings. |
Conclusion: SEBI’s LODR Regulation 2015 emphasizes the importance of various board committees in ensuring transparency, accountability, and effective risk management within listed entities. By defining committee compositions, roles, and meeting norms, SEBI aims to strengthen corporate governance practices and enhance investor confidence. Entities subject to these regulations must adhere to these committee requirements to uphold their responsibilities towards stakeholders and comply with regulatory standards.
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