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CMA Intermediate · Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Under Section 178 of the Companies Act, 2013, the Nomination and Remuneration Committee of a company required to have one must consist of:

The Nomination and Remuneration Committee must have three or more non-executive directors, and at least half of them must be independent directors. The Act does not demand that every member be independent, and executive directors cannot be members.

  1. ATwo or more directors, of whom at least one is independent
  2. BThree or more non-executive directors, of whom not less than one-half are independent directorsCorrect
  3. CThree or more directors, all of whom must be independent directors
  4. DThree or more directors, of whom at least one is a whole-time director

Explanation

Section 178(1) requires three or more non-executive directors, with not less than one-half being independent directors. Requiring all members to be independent goes beyond the Act. Allowing a whole-time director contradicts the non-executive requirement.

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