Capital Market and Securities Laws · Listing Obligations and Disclosure Requirements

Corporate Governance under SEBI LODR: Board and Committees

Updated 11 October 2026 · Fact-checked

Corporate governance under the SEBI (LODR) Regulations, 2015 sets rules for a listed entity's board and four key committees: audit, nomination and remuneration, stakeholders relationship, and risk management. To answer questions, state the regulation, the required composition, the meeting frequency and quorum, then apply them to the facts and conclude.

Understand Corporate Governance Requirements: Board and Committees

A listed company raises money from the public. So SEBI requires a stronger governance structure than the Companies Act asks of an ordinary company. This sits in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mainly Regulations 17 to 27. SEBI makes such regulations under its powers in the SEBI Act, 1992 and the Securities Contracts (Regulation) Act, 1956 (section 31 of the SCRA lets SEBI make regulations to carry out the purposes of that Act, and section 11A of the SEBI Act lets SEBI specify listing requirements).

The logic is simple. The board must not be run only by insiders, so the regulations require a mix of executive and non-executive directors and a minimum share of independent directors. An independent director has no material link with the company or its promoters and can speak without pressure.

The board then delegates sensitive work to committees, and independent directors dominate them. The Audit Committee (Regulation 18) watches financial reporting, auditors, related party deals and internal controls. The Nomination and Remuneration Committee (Regulation 19) handles who gets on the board and what directors and senior management are paid. The Stakeholders Relationship Committee (Regulation 20) resolves grievances of security holders. The Risk Management Committee (Regulation 21) oversees risk policy, and applies to the top 1000 listed entities by market capitalisation.

Regulation 17 covers the board itself. Regulation 17A limits how many directorships one person can hold. Regulation 25 covers the duties and conduct of independent directors. Regulation 22 deals with vigil mechanism, 23 with related party transactions, 24 with subsidiaries, 26 with other directors and key managerial personnel, and 27 with other compliance, including the quarterly governance report.

The Companies Act, 2013 (for example sections 149, 177 and 178) sets a base. LODR adds listed-entity detail on top, such as meeting gaps, quorum with independent directors present, and independent chairpersons for the audit and nomination committees. On the audit committee LODR is stricter on the independent share: at least two-thirds of members must be independent directors, against a majority under the Companies Act. For the nomination and remuneration committee the two laws are close (at least half independent). The thresholds below are as commonly taught; SEBI amends them often, so check the latest text before the exam.

Key rules to remember

Board composition (Reg 17): Non-executive directors ≥ 50% of board; at least one woman director. Chairperson a non-executive director and not related to a promoter or to senior management: independent directors ≥ 1/3 of board. Otherwise (for example an executive chairperson, or a chairperson who is a promoter or related to a promoter or senior management): independent directors ≥ 1/2 of board; Round up when the fraction is not a whole number. Top 1000 listed entities must also have at least one woman independent director.
Board meetings (Reg 17): At least 4 meetings a year; gap between two meetings ≤ 120 days; Same frequency and gap apply to the audit committee.
Directorship limits (Reg 17A): Maximum 8 listed entities for any director; independent director maximum 7; independent director who is a whole-time director elsewhere: maximum 3; Limits count directorships in listed entities.
Audit Committee (Reg 18): Members ≥ 3 directors; at least 2/3 of members are independent directors; chairperson an independent director; meets ≥ 4 times a year, gap ≤ 120 days; quorum = greater of 2 members or 1/3 of members, with at least 2 independent directors; Round the two-thirds figure up (for example, 2/3 of 4 members is 2.67, so 3 independent directors). All members financially literate; at least one with accounting or financial management expertise. Company secretary acts as secretary.
Nomination and Remuneration Committee (Reg 19): Members ≥ 3 directors; all non-executive; independent directors ≥ 1/2 of members; chairperson an independent director; meets ≥ 1 time a year; quorum = greater of 2 or 1/3, with at least 1 independent director; Companies Act section 178 also asks for at least half independent. LODR adds the independent chairperson and the quorum detail.
Stakeholders Relationship Committee (Reg 20): Members ≥ 3; chairperson a non-executive director; at least 1 independent director; meets ≥ 1 time a year; quorum = greater of 2 or 1/3, with at least 1 independent director; Focus is grievances of security holders such as non-receipt of dividends or annual reports.
Risk Management Committee (Reg 21): Members ≥ 3; majority are board members, including at least 1 independent director; chairperson a board member; meets ≥ 2 times a year; gap ≤ 180 days; quorum = greater of 2 or 1/3, with at least 1 board member; Mandatory for the top 1000 listed entities by market capitalisation. Senior executives may be members.
Independent directors' meeting (Reg 25): At least 1 meeting a year, without non-independent directors and management; Vacancy in the office of an independent director must be filled promptly, within the time set by the regulations (three months from the vacancy, or the next board meeting if later).

How to solve Corporate Governance Requirements: Board and Committees questions

Most questions ask you to state the requirement, or test a company's board or committee against it. Use the same method each time.

1Identify what is asked: board, independent directors, or a named committee. Name the regulation (17, 18, 19, 20, 21 or 25).
2Check applicability: is the entity a listed entity, and for the risk committee is it in the top 1000 by market capitalisation?
3Write the composition rule: minimum members, share of independent directors, who chairs.
4Write the meeting rule: minimum meetings a year, maximum gap, quorum.
5Apply the numbers to the facts. Calculate the fraction, round up, and compare with the actual count.
6Add the role or function of the body in one or two lines if the question asks for scope.
7Conclude clearly: compliant or not, and what the company must do to comply.

Quickest way: Committee comparison grid

When to use it: Use when a question asks you to compare committees or recall composition quickly.

Write four rows: Audit, NRC, Stakeholders, Risk. Write columns: minimum members, independent share, chairperson, meetings.
Fill Audit: 3 directors, at least two-thirds independent, independent chair, 4 a year.
Fill NRC: 3, all non-executive and at least half independent, independent chair, 1 a year.
Fill Stakeholders: 3, at least one independent, non-executive chair, 1 a year.
Fill Risk: 3, majority board members with one independent, board member chair, 2 a year.
Use the grid to answer, then add the function of the committee in a sentence.

Common mistakes in Corporate Governance Requirements: Board and Committees

Mixing up the Nomination and Remuneration Committee with the Stakeholders Relationship Committee.
Both are non-audit committees with similar names and a minimum of three members.
Fix: Link NRC to directors and pay (appointment, evaluation, remuneration). Link Stakeholders to investor grievances. Remember the chair: independent for NRC, non-executive for Stakeholders.
Mixing up the independent share for the audit committee and the nomination and remuneration committee.
Students blend the rules of different committees and remember one fraction for both.
Fix: Audit committee: at least two-thirds of members must be independent directors, and the chair must be independent. NRC: at least half of members independent, all non-executive. Calculate and round up.
Applying one-third independent directors to every board.
The one-third rule is learnt first and the other case is forgotten.
Fix: Check the chairperson. A non-executive chair not related to a promoter or senior management: one-third. Otherwise, such as an executive chair or a promoter or promoter-related chair: at least half.
Assuming the risk management committee applies to every listed entity.
Other committees apply broadly, so students assume this one does too.
Fix: State that Regulation 21 applies to the top 1000 listed entities by market capitalisation.
Confusing meeting gaps: using 120 days for the risk committee.
120 days is common to the board and audit committee.
Fix: Risk committee meets at least twice a year with a gap of not more than 180 days.
Giving a conclusion without applying the numbers.
Students recite the rule and stop.
Fix: Always compute the minimum required, compare with the facts, and state the result and the remedy.

Worked examples

Example 1

Meridian Textiles Ltd, a listed company, has a board of 10 directors. The chairperson is also the Managing Director. Four directors are independent. Examine whether the board composition complies with the LODR Regulations.

Show the solution

Provision: Regulation 17 requires at least 50% non-executive directors. Where the chairperson is not a non-executive director (here, an executive chairperson), independent directors must be at least half of the board.
Calculation: half of 10 is 5. So at least 5 independent directors are needed.
Facts: only 4 are independent, which is below 5. The shortfall is 1.
Non-executive test: at least 5 of the 10 directors must be non-executive. The Managing Director is executive. The 4 independent directors are non-executive, but the facts do not say whether any of the other 5 directors are. Once the board has 5 independent directors, the non-executive test is met automatically, because independent directors are non-executive.
Remedy: if one non-independent director is replaced by an independent director, the board has 5 independent directors out of 10. If new directors are added instead, the board grows, so 2 must be added: 6 of 12 is half.

Answer: The board does not comply. With an executive chairperson, at least 5 of 10 directors must be independent, but Meridian has 4. It must replace one non-independent director with an independent director, or add two independent directors (6 of 12). It must also have at least one woman director.

Example 2

Kaveri Pharma Ltd, a listed company, has an audit committee of 6 directors, of whom 3 are independent directors. The committee is chaired by a non-executive promoter director. Examine compliance with Regulation 18 and state the quorum.

Show the solution

Provision: Regulation 18 requires at least three directors as members, at least two-thirds of the members to be independent directors, and an independent director as chairperson.
Calculation: two-thirds of 6 is 4. So at least 4 independent directors are needed.
Facts: only 3 are independent. The shortfall is 1.
Chair: a non-executive promoter director is not an independent director, so the chair requirement is also breached.
Quorum: the greater of 2 members or one-third of members (one-third of 6 is 2). So quorum is 2 members, and at least 2 of those present must be independent directors.

Answer: The committee does not comply. It needs at least 4 independent directors out of 6, but has 3, and the chairperson must be an independent director. Quorum is 2 members, with at least 2 independent directors present. Kaveri Pharma must reconstitute the committee, for example by replacing one non-independent member with an independent director (4 of 6) and appointing an independent director as chairperson.

Exam tips

Learn the grid of four committees cold. Most questions are a recall or a compare question.
For numerical facts, always show the fraction, the rounded figure and the actual count before concluding.
Begin each answer with the regulation number, then the rule, the facts and the conclusion, which is the ICSI answer style.
Mention that LODR adds listed-entity detail to the Companies Act, such as meeting gaps, quorum with independent directors present and independent chairpersons. On the audit committee LODR is stricter, with at least two-thirds independent members against a majority under the Companies Act. For the NRC the share is at least half under both laws.
Check the date of any SEBI amendment you cite. Where unsure of a threshold, state the principle and avoid inventing a figure.

Practice questions from Listing Obligations and Disclosure Requirements

Corporate Governance Requirements: Board and Committees in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Corporate Governance Requirements: Board and Committees: frequently asked questions

What is the composition of the audit committee under LODR?

It must have at least three directors, and at least two-thirds of its members must be independent directors. The chairperson must be an independent director. All members must be financially literate, and at least one must have accounting or related financial management expertise.

What is the difference between the nomination and remuneration committee and the stakeholders relationship committee?

The nomination and remuneration committee deals with appointment, evaluation and pay of directors and senior management. It has at least three members, all non-executive, at least half of them independent, and an independent chair. The stakeholders relationship committee deals with grievances of security holders and has a non-executive chair.

How many independent directors must a listed company's board have?

If the chairperson is a non-executive director and is not related to a promoter or to senior management, at least one-third of the board must be independent. Otherwise, for example where the chairperson is an executive director, or a promoter or related to one, at least half must be independent.

Is the risk management committee mandatory for all listed companies?

No. Regulation 21 applies to the top 1000 listed entities by market capitalisation. It must meet at least twice a year, with a gap of not more than 180 days.