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CMA Intermediate · Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Mr. Raghav, the executive chairperson of Sundaram Textiles Ltd, a listed public company, is proposed as a member of its Nomination and Remuneration Committee. Which statement is correct?

He may be appointed a member of the Nomination and Remuneration Committee, because the Act permits the company's chairperson, executive or non-executive, to be a member. However, he is not permitted to chair that Committee.

  1. AHe may be a member and may also chair the Committee
  2. BHe cannot be a member because he is an executive director
  3. CHe may be a member but shall not chair the CommitteeCorrect
  4. DHe may be a member only if he is also an independent director

Explanation

The proviso to section 178(1) lets the chairperson of the company, whether executive or non-executive, be appointed a member of the Committee but he shall not chair it. The option allowing him to chair contradicts the proviso.

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