{"id":4009,"date":"2020-02-24T12:57:06","date_gmt":"2020-02-24T12:57:06","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=4009"},"modified":"2020-12-11T16:35:00","modified_gmt":"2020-12-11T11:05:00","slug":"different-committees-and-functioning-as-per-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/different-committees-and-functioning-as-per-companies-act-2013\/","title":{"rendered":"Different Committees and Their Functioning as per Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Committees or Board Committees as per Companies Act, 2013 are formed to perk up effectiveness and competence, in areas where more focused, specific and technical dialogues are required. These Committees prepare the ground for decision-making and report it in subsequent Board Meeting to achieve the desired results. The Committees as per <strong>Companies Act, 2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\">[1]<\/a><\/sup> can be set up for short term basis, temporary or permanent basis. The article will discuss the different Committees as per Companies Act, 2013 and their functioning according to the rules prescribed in the Act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What\nis the Different Types of Committees as per Companies Act, 2013?<\/h2>\n\n\n\n<p><strong><em>The different types of Committees as per Companies Act, 2013 are:<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"580\" height=\"343\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/image-20.png\" alt=\"The different types of Committees as per Companies Act, 2013\" class=\"wp-image-4010\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/image-20.png 580w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/image-20-300x177.png 300w\" sizes=\"(max-width: 580px) 100vw, 580px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Audit\nCommittee<\/h3>\n\n\n\n<p>\u00a0The primary purpose of this Committee is to provide supervision of the financial reporting process of the <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>Registered Company<\/strong><\/a>, the audit procedure, the Company\u2019s method of internal controls and compliance with other laws and regulations. <\/p>\n\n\n\n<div class=\"shadow1\">In Section 292A of Companies Act, 2013, read with Rules 6 Companies(Meeting of Board and its Powers) Rules, 2014,  every Company having a paid-up capital of not less than 10 Crores Rupees or more and turnover of 100 Crores Rupees or more shall constitute a Committee known as &#8220;Audit Committee&#8221;. The formation of Audit Committee is limited to a Listed Public Company only.<\/div>\n\n\n\n<p><strong><em>The\ncomposition of Audit Committees as per Companies Act, 2013, is as follows: <\/em><\/strong><\/p>\n\n\n\n<ul><li>Minimum 3\nDirectors with Independent Directors forming majority<\/li><li>Members\nincluding the Chairman of Audit committee should be able to read and\nunderstand, the financial statement<\/li><\/ul>\n\n\n\n<p><strong><em>The\ncomposition of Audit Committee as per Clause 49 of the Listing Agreement is as\nfollows:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Minimum of 3\nDirectors of which 2\/3<sup>rd<\/sup> are Independent Directors<\/li><li>All members\nshould be financially literate, and at least 1 member shall have accounting or\nrelated financial management expertise.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Nomination\nand Remuneration Committee<em><\/em><\/h3>\n\n\n\n<p>The Nomination and Remuneration Committee ensure a fair transparent and equitable remuneration to employees and Directors based quality of people, their presentation and potential to run the Company successfully. <\/p>\n\n\n\n<div class=\"shadow1\">Section 177 of Companies Act, 2013, read with Rules 7 of Companies (Meeting of Board and its Powers) Rules, 2014, every Company having a paid-up capital of not less than 10 Crores Rupees or more and turnover of 100 Crores Rupees or more shall constitute a Committee of known as \u201cNomination and Remuneration Committee\u201d.<\/div>\n\n\n\n<p><strong><em>The\ncomposition of Nomination and Remuneration Committees as per Companies Act,\n2013, is as follows:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Minimum of 3\nNon-Executive Directors and a half shall be Independent Directors.<\/li><li>Chairperson may\nbe appointed as a member of Committee but will not chair such Committee <\/li><\/ul>\n\n\n\n<p><strong><em>The\ncomposition of Nomination and Remuneration Committee as per Clause 49 Listing\nAgreement is as follows:<\/em><\/strong><\/p>\n\n\n\n<ul><li><strong><em>At least 3\nNon-Executive Directors<\/em><\/strong><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Stakeholders\nRelationship Committee&nbsp; <\/h3>\n\n\n\n<p>This Company is formed\nto settle the grievances of stakeholders. Section 178 of Companies Act, 2013,\nstates that a Company which holds 1000 number of shareholders, debenture\nholders, deposit holders, and any other security holders at any time during a\nfinancial year.<\/p>\n\n\n\n<p><strong><em>The composition of <\/em><\/strong><strong><em>Stakeholders Relationship<\/em><\/strong><strong><em>\nCommittees as per Companies Act, 2013, is as follows: <\/em><\/strong><\/p>\n\n\n\n<ul><li>1 Chairperson who shall be Non-Executive\nDirector and such other members as decided by the Board<\/li><\/ul>\n\n\n\n<p><strong><em>The composition of\nStakeholders Relationship Committee as per Clause 49 of the Listing Agreement\nis as follows:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Chairmanship of Non-Executive Director and such other members as decided by the Board.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important\"><a href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/\">What is GDR (Global Depository Receipt): An Overview<\/a><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Corporate\nSocial Responsibility (CSR) Committee<\/h3>\n\n\n\n<p>A\nCSR Committee is a way of conducting business, by which corporate entities\nvisibly contribute to social good. Section 135 of Companies Act, 2013, with\nCompanies (CSR Policy) Rules, 2014 states that every company having a net worth\nof not less than Rs. 500 crores or more, or turnover of not less than Rs. 1000\ncrores or more shall constitute a Corporate Social Responsibility Committee.<\/p>\n\n\n\n<p><em>The composition of CSR Committees as per Companies Act, 2013, is as follows: In the case of listed Company at least 3 Directors, out of which one should be an Independent director<\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"893\" height=\"225\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Corpbiz-new-pic-1.png\" alt=\"The composition of CSR Committees\" class=\"wp-image-4206\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Corpbiz-new-pic-1.png 893w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Corpbiz-new-pic-1-300x76.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Corpbiz-new-pic-1-768x194.png 768w\" sizes=\"(max-width: 893px) 100vw, 893px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What\nare the functions of Committees as per Companies Act, 2013?<\/h2>\n\n\n\n<p><strong><em>The primary function of\nthe Committees as per Companies Act, 2013 is as follows:<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Audit\nCommittee<\/h3>\n\n\n\n<ul><li>To recommend appointment, remuneration, and terms of appointment of the auditor of the Company.<\/li><li>At the <a href=\"https:\/\/corpbiz.io\/learning\/annual-general-meeting\/\"><strong>Annual General Meeting<\/strong><\/a><strong>,<\/strong> the Chairman of the Committee should be present to answer the shareholder&#8217;s inquiry.<\/li><li>To establish a Vigil Mechanism Policy<\/li><li>To call for remarks of the Auditors about the internal control system<\/li><li>To discuss any issues related to internal and statutory auditors and the management of the Company.<\/li><li>To inspect in any subject concerning the items or referred to it by the Board. <\/li><li>To obtain skilled advice from outside sources.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Nomination\nand Remuneration Committee<\/h3>\n\n\n\n<ul><li>To review the\nelements of the remuneration package, structure of remuneration package.<\/li><li>To review the\nchanges to remuneration package, terms of appointment, severance fee,\nrecruitment and, termination policies and procedures.<\/li><li>To recommend the\nshortlisted candidates who are qualified to be Director and who can be appointed\nin senior management<\/li><li>Recommendation\nof success plans for the directors<\/li><li>The Committee is\nauthorized to seek information about any employee, and the management is\ndirected to co-operate.<\/li><li>The Committee\ncan be present at the Annual General Meeting to answer the shareholder&#8217;s\nqueries.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Stakeholders\nRecognition Committee<\/h3>\n\n\n\n<ul><li>To examine and resolve the grievances of\nsecurity holders of the Company<\/li><li>To look into redressal of shareholder\nand investor complaints like transfer of shares, non-receipt of the balance sheet,\netc.<\/li><li>To expedite the process of share\ntransfers.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Corporate\nSocial Responsibility Committee<\/h3>\n\n\n\n<ul><li>To suggest and devise a CSR Policy\naccording to the Schedule VII of the Companies Act, 2013 to the Board.<\/li><li>To recommend the amount of expenditure\nof the devised policy above.<\/li><li>To monitor the CSR Policy of Company\nfrom time to time and prepare a transparent monitoring mechanism.<\/li><li>Institution of a transparent monitoring\nmechanism for implementation of the CSR projects or programs or activities\nundertaken by the Company.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p> There is an expansion the number of Committees as per Companies Act, 2013 which provide duties for each of them as compared to the 1956 Act. Further, an attempt is made to bring the law laid down for Committees as per Companies Act, 2013, in consonance with the Listing Agreements. It is better to consult an expert to understand the functionality of the Committees as per the Companies Act, 2013. We at <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong> <\/a>have professionals who can assist you with it. Our professionals will plan ideally and will make sure the successful completion.&nbsp; &nbsp; <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-for-appointment-and-resignation-of-the-directors\/\">Companies Act 2013 Provides a Procedure for Appointment and Resignation of the Directors\n <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Committees or Board Committees as per Companies Act, 2013 are formed to perk up effectiveness and competence, in areas where more focused, specific and technical dialogues are required. These Committees prepare the ground for decision-making and report it in subsequent Board Meeting to achieve the desired results. The Committees as per Companies Act, 2013[1] can [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":4025,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120,339],"tags":[353],"acf":{"service_id":"321"},"authorName":"Sakshi Sharda","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/sakshi-sharda.jpg","authorDescription":"Sakshi Sharda has done BBALLB(HONS) and holds a strong knowledge on the matters pertaining to finance and law. From the past one year she is working as a legal advisor and in her leisure time she works on improvising her knowledge. Sakshi is spreading her knowledge by writing for Corpbiz.","postViews":29259,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4009"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=4009"}],"version-history":[{"count":17,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4009\/revisions"}],"predecessor-version":[{"id":21693,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4009\/revisions\/21693"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/4025"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=4009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=4009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=4009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}