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CS Executive · Company Law and Practice · Meetings of Board and its Committees

Sundaram Foods Ltd, a listed public company, is constituting its Nomination and Remuneration Committee. Which composition satisfies Section 178(1)?

The committee must have three or more non-executive directors, with not less than half being independent directors. Three non-executive directors including two independents satisfies this, whereas one independent out of three, only two members, or executive members would not comply.

  1. AThree non-executive directors, of whom one is independent
  2. BThree non-executive directors, of whom two are independentCorrect
  3. CTwo non-executive directors, both independent
  4. DFour directors, two executive and two independent

Explanation

The committee needs three or more non-executive directors, with at least one-half independent. Three members with two independent meets both tests. One independent of three is less than half, two members is too few, and executive directors cannot count.

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