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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Committees

Meera Pharma Ltd's Stakeholders Relationship Committee considered a security holder's grievance in good faith but could not resolve it despite reasonable efforts. A director asks whether the company has contravened Section 178 of the Companies Act, 2013. Which is correct?

There is no contravention. Although the committee must consider and resolve grievances of security holders, the proviso to Section 178(8) provides that inability to resolve or consider a grievance in good faith does not amount to a contravention, so no penalty applies.

  1. AYes, any unresolved grievance attracts the penalty under Section 178
  2. BYes, but only the officers in default are penalised, not the company
  3. CNo, the proviso says inability to resolve or consider a grievance in good faith is not a contraventionCorrect
  4. DNo, because the committee's duty under the section is only to record grievances

Explanation

Section 178(6) makes the committee consider and resolve grievances, but the proviso to Section 178(8) states that inability to resolve or consider any grievance in good faith does not constitute a contravention. Option A ignores that proviso. Option D misstates the duty, which is to consider and resolve.

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