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

Kaveri Power Ltd's Stakeholders Relationship Committee received a complaint from a debenture-holder about delayed interest. The committee examined it in good faith but could not resolve it before the quarter ended. A director argues the company has contravened section 178. What is the correct position under the Companies Act, 2013?

This is not a contravention. The proviso to section 178(8) provides that the committee's inability to resolve or consider a grievance in good faith does not amount to a contravention of the section. The committee's functions cover debenture-holders, as they are security holders.

  1. AIt is a contravention, as every grievance must be resolved within the quarter
  2. BIt is a contravention attracting a fine on the company only
  3. CIt is not a contravention, because inability to resolve or consider a grievance in good faith is not a contraventionCorrect
  4. DIt is a contravention only if the complainant is a shareholder and not a debenture-holder

Explanation

The proviso to section 178(8) says that inability to resolve or consider any grievance by the committee in good faith does not constitute a contravention. Debenture-holders are security holders, so the committee's function covers them. The distractor on strict resolution within the quarter ignores this proviso.

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