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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights

Bharat Agro Ltd, a listed public company, proposes an NRC of six members. Which composition satisfies Section 178(1)?

Section 178(1) requires at least three members, all non-executive directors, with not less than half being independent. A six-member NRC with three independent directors and three other non-executive directors meets this, whereas the other structures fail on independence proportion, executive membership or minimum size.

  1. ASix members: two independent directors and four non-executive non-independent directors
  2. BSix members: three independent directors and three non-executive directorsCorrect
  3. CSix members: four independent directors and two executive directors
  4. DTwo members: both independent directors

Explanation

The NRC needs three or more non-executive directors, with at least one-half independent. For six members, at least three must be independent and all must be non-executive. Option A has only one-third independent; option C includes executive directors; option D has fewer than three members.

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