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

Rohan Traders Private Limited has only two directors, Mr Rohan Shah and Ms Anita Rao. Its net profit is Rs 6 crore, so the CSR provisions apply, and its obligation exceeds Rs 50 lakh. The company is not required to appoint independent directors. Which statement is correct?

A private company that has only two directors and is not required to appoint independent directors forms its CSR Committee with those two directors. It does not need a third member or an independent director, and being a private company does not exempt it from the CSR provisions.

  1. AIt must appoint an independent director to form a three-member CSR Committee
  2. BIt need not form a committee because it is a private company
  3. CThe two directors should form the CSR CommitteeCorrect
  4. DThe CSR Committee must be formed by co-opting two outside persons

Explanation

A private company with only two directors constitutes its CSR Committee with those two directors. It is not required to include an independent director because it is not required to appoint one. Private companies are not exempt from the CSR provisions, so the second option is wrong. Nothing requires co-opting outsiders.

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