CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights
Tarun Engineering Ltd, a listed company, has 1,500 shareholders. Shareholders' grievances remain unresolved though the Stakeholders Relationship Committee considered each in good faith. The Committee is chaired by an executive director. Which statement is correct under sections 178 and 177?
The executive director as chair is a defect, because the Stakeholders Relationship Committee chair must be a non-executive director. However, mere inability to resolve grievances, when they were considered in good faith, does not itself amount to a contravention.
- AThe chair's executive status is a defect, but inability to resolve grievances in good faith is not itself a contraventionCorrect
- BThere is no defect because any director may chair the committee
- CThe company contravenes the Act merely because grievances remain unresolved despite good faith
- DThe committee is not required because the company has more than 1,000 holders
Explanation
Section 178(5) requires the chairperson of the Stakeholders Relationship Committee to be a non-executive director, so an executive chair is a defect. Under the proviso to section 178(8), inability to resolve or consider a grievance in good faith is not a contravention. Hence only the first statement is correct.
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