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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Committees

A committee constituted by the Board of Sahyadri Producer Company Ltd under section 378U wants to co-opt two outside agricultural experts as members. Which statement is correct?

Co-option is allowed only with the Board's approval, and the Chief Executive or a director of the Producer Company must be a member of the committee. Under section 378U(2) the committee cannot co-opt outsiders on its own, and no general meeting approval is required.

  1. ACo-option is allowed only with the Board's approval, and the Chief Executive or a director of the company must be a member of the committeeCorrect
  2. BCo-option is allowed by the committee alone, and no director need be a member
  3. CCo-option is not allowed because only directors can sit on committees
  4. DCo-option needs approval of the general meeting, and the Chief Executive must chair the committee

Explanation

Section 378U(2) lets the committee co-opt persons as members with the Board's approval. The proviso requires the Chief Executive or a director of the Producer Company to be a member of such committee. The committee cannot co-opt on its own authority.

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