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

Rohini Pharma Ltd's Board did not accept a recommendation made by its Audit Committee on the appointment of auditors. What must the company do under Section 177(8)?

The company must disclose in the Board's report that it did not accept the Audit Committee's recommendation, along with the reasons. Section 177(8) requires this disclosure, in addition to disclosing the committee's composition.

  1. ADisclose the non-acceptance with reasons in the Board's reportCorrect
  2. BObtain the Audit Committee's written consent to proceed
  3. CRefer the matter to the Tribunal for a decision
  4. DNothing, as the Board is free to ignore recommendations without disclosure

Explanation

Section 177(8) requires the Board's report under section 134(3) to disclose the Audit Committee's composition and, where a recommendation was not accepted, to state this along with the reasons. No consent or Tribunal reference is required, and silence would breach the section.

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