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

Lotus Retail Ltd, a listed public company, adopts a new remuneration policy recommended by its NRC. It has a website. The CFO proposes only to circulate the policy to directors internally, and to mention in the Board's report that a policy exists. Which statement is correct under section 178 of the Companies Act, 2013?

The proposal is not acceptable. Under the proviso to section 178(4), the remuneration policy must be placed on the company's website, and the Board's report must disclose its salient features, any changes and the web address of the policy.

  1. AAcceptable, since only the existence of the policy must be reported
  2. BNot acceptable; the policy must be on the website and the Board's report must disclose its salient features, changes and web addressCorrect
  3. CNot acceptable; the policy must be approved by shareholders by special resolution before use
  4. DAcceptable, because website placement is required only for the nomination criteria

Explanation

The proviso to section 178(4) requires the policy to be placed on the company's website, if any, and the Board's report to disclose the salient features, any changes, and the web address. Merely noting existence or internal circulation does not comply. No shareholder special resolution is prescribed in the text.

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