CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights
Sundaram Textiles Ltd, an unlisted public company, had 1,450 shareholders and debenture-holders together at one point during the financial year. Its board has not formed a Stakeholders Relationship Committee. Which statement is correct under the Companies Act, 2013?
The company must constitute a Stakeholders Relationship Committee. Section 178(5) applies to any company having more than one thousand security holders at any time during a financial year, whether listed or not, and Sundaram Textiles crossed that number.
- ANo committee is needed because the company is unlisted
- BA committee is needed because security holders exceeded one thousand at a point in the yearCorrect
- CA committee is needed only if more than five thousand holders exist
- DA committee is needed only if the company is also a listed entity
Explanation
Section 178(5) requires a Stakeholders Relationship Committee for a company with more than one thousand shareholders, debenture-holders, deposit-holders and other security holders at any time during a financial year. Listing is not the test, so the unlisted status of Sundaram Textiles does not exempt it.
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