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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Risk Management

Kaveri Textiles Ltd, a listed company covered by the SEBI LODR rule on Risk Management Committees, is forming its committee. Which composition is consistent with the requirement?

A compliant Risk Management Committee has at least three members, a majority drawn from the board, and includes at least one independent director. The chairperson must be a director, while senior executives may also sit. Committees of non-directors, outsiders or only two members do not comply.

  1. AMinimum three members with a majority of board members, including at least one independent directorCorrect
  2. BTwo members, all of them senior executives who are not directors
  3. CMinimum three members, all of whom must be non-executive promoters
  4. DFive members, all drawn from the statutory auditor's firm

Explanation

The LODR requires at least three members, with a majority being board members, and the chairperson must be a board member; senior executives may also be members. At least one independent director must be included. The other options breach the minimum size, the board-majority rule or the independence of the committee.

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