Skip to content

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

Orion Steels Ltd, a listed company, has a Nomination and Remuneration Committee of four non-executive directors, two of them independent. The executive chairperson of the company is proposed as a member and also as the chair of the committee, to link remuneration with ESG targets. Applying section 178, what is the position?

The chairperson may be appointed a member of the Nomination and Remuneration Committee but cannot chair it. The proviso to section 178(1) applies whether the chairperson is executive or non-executive, and Board unanimity does not change this.

  1. ABoth are permitted because the chairperson is a director
  2. BThe chairperson may be a member but cannot chair the committeeCorrect
  3. CThe chairperson can chair it only if the Board unanimously agrees
  4. DThe chairperson cannot even be a member because the chairperson is executive

Explanation

The proviso to section 178(1) allows the chairperson of the company, whether executive or non-executive, to be a member of the NRC but not to chair it. The existing composition of four non-executive directors with two independent satisfies the one-half requirement. Board consent cannot override the bar on chairing.

Did you get it right without looking?

One question tells you little. A timed set on Board Committees shows your real accuracy, how long you take and where you lose marks.

Practise Board CommitteesFree diagnostic mock

More Board Committees questions