What Are Board Committees?

Board Committee / Board Committees

A committee is a group of one or more individuals in an organisation made to
serve a certain role. Board committees are standing committees that are
subsidiaries of the board of directors. These are primarily composed of members
of the board. Board committees are made to serve a more specific purpose
compared to the board in total. A board committee may be called to advise the
board on particular areas of business.
Functions of board committees
Board committees offer an organisational capability — a practical way to give
order to the board’s purpose. Simultaneously, they offer flexibility and allow the
board to adapt to the fluctuating needs of the environment. Here are some core
functions of board committees:

Oversight responsibilities: The board of directors performs oversight functions

through well-planned board committees. Oversight responsibilities of board
committees involve evaluating projects, policies and plans to ensure they comply
with the organisation’s goals, exhibit value for money and deliver results.
Decision-making powers: Board committees are essential decision-making
entities. Their purpose is well-understood when the board has a lot of members
and is unlikely to make effective choices. This job is often undertaken by the
executive committee that handles most of the policy decisions in business
meetings.
Recommendations to the board: One of the primary functions of board
committees is to give advice and make recommendations to the board concerning
capital distribution, risk indicators, needs of the board and more.
Membership of board committees
Members of board committees can be chosen by the chair of the board or by the
entire board. Here are the protocols for the membership of board committees:
Composition of committee members: The composition of committee members
should be an optimal combination of skills and knowledge while also considering
varying ages, ethnicities and genders. It’s crucial to include individuals well-versed
in business, accounting, law and marketing, depending on the type of committee.
Appointment of committee chairs: The nominations and corporate governance
committee is responsible for reviewing the candidates based on their skill set and
experience and finalising the eligible ones for the position of chair. The board
votes for their preferred candidate, and the person with the most votes is taken to
the Trustees for final approval.
Role of independent directors: To appoint the role of an independent director, the
board first verifies that the candidate possesses the right skill set and experience
to carry out the designated duties efficiently. The appointment is then approved
at the meeting of the shareholders. An explanatory statement and a letter of
appointment are issued to finalise the process.
Q.2 various board committees ,their role and responsibilities

VARIOUS COMMITTEES OF THE BOARD

The following are some of the important committees of the Board-

1. Audit Committee
2. Shareholders Grievance Committee
3. Remuneration Committee
4. Nomination Committee
5. Corporate Governance Committee
6. Corporate Compliance Committee

We shall deliberate on the functions of all the committees in detail.

AUDIT COMMITTEE
The Audit Committee shall assist the Board of Directors in the oversight of

(1) The integrity of the financial statements of the Company,

(2) The effectiveness of the internal control over financial reporting,

(3) The independent registered public accounting firm’s qualifications and
independence,

(4) The performance of the Company’s internal audit function and independent
registered public accounting firms,

(5) The Company’s compliance with legal and regulatory requirements,

(6) The performance of the Company’s compliance function.

Powers of Audit Committee:

The audit committee shall have powers which should include the following:

• To investigate any activity within its terms of reference.

• To seek information from any employee.
• To obtain outside legal or other professional advice.
• To secure attendance of outsiders with relevant expertise, if it
considers necessary.

Role of Audit Committee:

The role of the audit committee shall include the following:

• Oversight of the company’s financial reporting process and the

disclosure of its financial information to ensure that the financial
statement is correct, sufficient and credible.
• Recommending the appointment and removal of external auditor,
fixation of audit fee and also approval for payment for any other
services.
• Reviewing with management the annual financial statements before
submission to the board, focusing primarily on;
• Any changes in accounting policies and practices.
• Major accounting entries based on exercise of judgment by
management.
• Qualifications in draft audit report.
• Significant adjustments arising out of audit.
• The going concern assumption.
• Compliance with accounting standards.
• Compliance with stock exchange and legal requirements concerning
financial statements
 • Any related party transactions
• Reviewing with the management, external and internal auditors, the
adequacy of internal control systems.
• Reviewing the adequacy of internal audit function, including the
structure of the internal audit department, staffing and seniority of the
official heading the department, reporting structure coverage and
frequency of internal audit.
• Discussion with internal auditors any significant findings and follow up
there on.
• Reviewing the findings of any internal investigations by the internal
auditors into matters where there is suspected fraud or irregularity or
a failure of internal control systems of a material nature and reporting
the matter to the board.
• Discussion with external auditors before the audit commences about
nature and scope of audit as well as post-audit discussion to ascertain
any area of concern.
• Reviewing the company’s financial and risk management policies.
• To look into the reasons for substantial defaults in the payment to the
depositors, debenture holders, shareholders (in case of nonpayment
of declared dividends) and creditors.

Review of information by Audit Committee:

The Audit Committee shall mandatorily review the following information:

• Financial statements and draft audit report, including quarterly / half-

yearly financial information;
• Management discussion and analysis of financial condition and results
of operations;
• Reports relating to compliance with laws and to risk management;
• Management letters / letters of internal control weaknesses issued by
statutory / internal auditors; and
• Records of related party transactions
• The appointment, removal and terms of remuneration of the Chief
internal auditor shall be subject to review by the Audit Committee

SHAREHOLDERS GRIEVANCE COMMITTEE

In terms of Clause 49-IV(G)(iii) of the Listing Agreement, a board committee
under the chairmanship of a non-executive director shall be formed to
specifically look into the redressal of shareholder and investors complaints like
transfer of shares, non receipt of balance sheet, non receipt of declared
dividends etc. This committee shall be designated as “Shareholders/ Investors
Grievance Committee

The terms of reference of our Shareholders’/ Investors Grievance Committee

are given below:
“To allot the Equity Shares of the Company, and to supervise and ensure:

• Efficient transfer of shares; including review of cases for refusal of

transfer transmission of shares and debentures;
• Redressal of shareholder and investor complaints like transfer of
shares, non-receipt of balance sheet, non-receipt of declared
dividends etc;
• Issue of duplicate / split / consolidated share certificates;
• Allotment and listing of shares;
• Review of cases for refusal of transfer / transmission of shares and
debentures;
• Reference to statutory and regulatory authorities regarding investor
grievances; and to otherwise ensure proper and timely attendance and
redressal of investor queries and grievances.”

The Shareholders/ Investor Grievances Committee looks into redressal of

shareholder and investor complaints, issue of Duplicate/ Consolidated Share
Certificates, Allotment and Listing of shares and review of cases for refusal of
Transfer/ Transmission of shares and debentures and reference to Statutory
and Regulatory Authorities. The scope and functions of the
Shareholders/Investor Grievances Committee are as per Clause 49 of the
Listing Agreement.

REMUNERATION COMMITTEE
The role and responsibilities of a Remuneration Committee is:

• To decide and approve the terms and conditions for appointment of

executive directors and/ or whole time Directors and Remuneration
payable to other Directors and matters related thereto.
• To recommend to the Board, the remuneration packages of the
Company’s Managing/Joint Managing/ Deputy Managing/Whole time
 / Executive Directors, including all elements of remuneration package
(i.e. salary, benefits, bonuses, perquisites, commission, incentives,
stock options, pension, retirement benefits, details of fixed component
and performance linked incentives along with the performance
criteria, service contracts, notice period, severance fees etc.);
• To be authorized at its duly constituted meeting to determine on
behalf of the Board of Directors and on behalf of the shareholders with
agreed terms of reference, the Company’s policy on specific
remuneration packages for Company’s Managing/Joint Managing/
Deputy Managing/ Whole-time/ Executive Directors, including
pension rights and any compensation payment;
• To implement, supervise and administer any share or stock option
scheme of the Company.
• to review the overall compensation policy, service agreements and
other employment conditions to Executive Directors and senior
executives just below the Board of Directors and make appropriate
recommendations to the Board of Directors;
• to review the overall compensation policy for Non-Executive Directors
and Independent Directors and make appropriate recommendations
to the Board of Directors;
• to make recommendations to the Board of Directors on the increments
in the remuneration of the Directors;
• to assist the Board in developing and evaluating potential candidates
for senior executive positions and to oversee the development of
executive succession plans;
• to review and approve on annual basis the corporate goals and
objectives with respect to compensation for the senior executives and
make appropriate recommendations to the Board of Directors;
• to review and make appropriate recommendations to the Board of
Directors on an annual basis the evaluation process and compensation
structure for our Company’s officers just below the level of the Board
of Directors;
• to provide oversight of the management’s decisions concerning
the performance and compensation of other officers of our
Company;
NOMINATION COMMITTEE
The primary role of the Nomination Committee of the board is to assist the
board by identifying prospective directors and make recommendations on
appointments to the board and the senior most level of executive management
below the board. The committee also clears succession plans for these levels.
The Nomination Committee is responsible for making recommendations on
board appointments and on maintaining a balance of skills and experience on
the board and its committees.

Succession planning for the board is a matter which is devolved primarily to

the Nomination Committee, although the committee’s deliberations are
reported to and debated by the full board. The board itself also regularly
reviews more general succession planning for the senior management of the
group .

Responsibilities of the nomination committee

The nomination committee is expected to fulfil the following
responsibilities:

• Succession planning

The committee monitors executive recruitment to stay alert of potential

succession risks and opportunities. It also facilitates the search for a new
CEO.

• Identifying and evaluating potential board members

A primary duty of this committee is to seek out the best candidates to fill
positions on the board and the company’s key managerial roles.

• Orientation, training and development

The nomination committee is charged with bringing new board

members up to speed about the organisation’s strategy, mission, culture
and management structure. It trains new members and offers ongoing
support to ensure that they adapt to their roles easily.

• Reviewing board policies

The committee has the authority to establish, review and make changes
to board policies and rules, including corporate governance practices.

• Leading board evaluations

Annual board evaluations are led by the nomination committee to

examine the board’s competence and each member’s role in furthering
the company’s mission.

• Making recommendations to the board

The nomination committee can make recommendations to the

board regarding its composition, size and the tenure and compensation
of directors.

CORPORATE GOVERNANCE COMMITTEE

Together with the audit and compensation committees, the
nominating/corporate governance committee rounds out the three standing
committees of a public company’s board of directors. It plays a critical role in
overseeing matters of corporate governance for the board, including
formulating and recommending governance principles and policies. As its
name implies, this committee is charged with enhancing the quality of
nominees to the board and ensuring the integrity of the nominating process.
Given the recent focus on board composition and diversity, director elections,
and proxy access, the role of nominating/corporate governance committee is
in the spotlight.

Responsibilities of the governance committee

A governance committee performs a central role for most boards,
helping to gauge its overall effectiveness and performance. Its
responsibilities vary, depending on the size of the board and
industry.

Here’s a list of some common responsibilities for governance

committees:
 • Oversees board compliance with company’s charter, articles, or
bylaws.
• Helps to create a board-member recruitment strategy, including
job descriptions.
• Conducts board assessments and makes recommendations on
who gets appointed, who gets retained, and who gets
removed.
• Organizes new board member orientation, onboarding, and
training.
• Monitors governance trends to guide the board on changes to
regulatory compliance.
• Helps to create a governance committee charter to know what
directives the committee needs to follow to best serve the
organization.
• Organizes continuing education and training opportunities to
help board members develop and grow.
• Reviews and updates the organization’s bylaws periodically to
keep policies and procedures up to date.
• Makes recommendations for committees and other board
structural changes.
• Seeks legal counsel to advise on best ways to deal with
conflicts of interest.
• Helps to review and approve policy changes suggested by
management

CORPORATE COMPLIANCE COMMITTEE

The primary Objective of the Compliance Committee is to review, oversee and
monitor:

• The company’s compliance with applicable legal and regulatory

requirements.
• The company’s policies, programs, and procedures to ensure
compliance with relevant laws, the company’s code of conduct, and
other relevant standards
• The company’s efforts to implement legal obligations arising from
settlement agreements and other similar documents
• Perform any other duties as are directed by the board of directors of
the company.
The committee’s specific responsibilities in this area include:

• Overseeing the corporate compliance program, including policies and

practices designed to ensure the organization’s compliance with all
applicable legal, regulatory, and ethical requirements.
• Recommending approval of the annual corporate compliance plan and
reviewing processes and procedures for reporting concerns by
employees, physicians, vendors, and others.
• Recommending organizational integrity guidelines and a Code of
Conduct.
• Reviewing and reassessing the guidelines and Code of Conduct at
least annually