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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

Kaveri Pharma Ltd is a listed company whose board wants to improve oversight of risk, audit and executive pay. A director says each area should be handled by a dedicated board committee that reports back to the full board. What is the main governance rationale for this approach?

Committees allow focused and specialised scrutiny of areas such as audit, risk and remuneration, while the full board remains collectively accountable. They support the board's work; they do not shift its responsibility, replace board meetings or give management control over decisions.

  1. AIt transfers the board's legal accountability to the committees
  2. BIt allows focused, specialised scrutiny while the full board remains accountableCorrect
  3. CIt removes the need for the board to meet
  4. DIt lets management control committee decisions

Explanation

Committees allow detailed, expert examination of specific areas and report to the full board. The board stays collectively accountable, so accountability is not transferred, and committees do not replace board meetings or hand control to management.

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