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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights

Tarang Textiles Ltd, a listed public company, has an Nomination and Remuneration Committee (NRC) of four non-executive directors. Its non-executive Chairperson, Mr. Iyer, is a member of the NRC. Which arrangement for chairing the NRC complies with Section 178?

The company's chairperson, whether executive or non-executive, may be appointed a member of the Nomination and Remuneration Committee but cannot chair it. Mr. Iyer can therefore sit on the NRC, while another eligible non-executive director, preferably independent, must act as its chairperson.

  1. AMr. Iyer chairs the NRC because he is the company's chairperson
  2. BMr. Iyer may be a member but must not chair the NRCCorrect
  3. CMr. Iyer cannot be a member of the NRC in any capacity
  4. DThe Managing Director chairs the NRC to ensure management input

Explanation

Section 178(1) proviso permits the chairperson of the company, executive or non-executive, to be an NRC member but not to chair it. So Mr. Iyer's membership is fine, but he cannot chair. Option A reverses the proviso.

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