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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Committees

Zenith Polymers Ltd, a listed public company, has an executive chairperson, Mr. Arvind Rao. The Board wants to include him in its Nomination and Remuneration Committee (NRC) of four non-executive directors (two independent). Which proposal complies with Section 178?

Mr. Rao may be appointed as an NRC member but cannot chair it. The proviso to Section 178(1) permits the chairperson of the company, executive or non-executive, to sit on the committee while expressly prohibiting him from chairing the Nomination and Remuneration Committee.

  1. AMr. Rao may be a member but must not chair the NRCCorrect
  2. BMr. Rao may be a member and may also chair the NRC
  3. CMr. Rao cannot be a member because he is an executive director
  4. DMr. Rao may chair the NRC only if he is an independent director

Explanation

The proviso to Section 178(1) lets the company's chairperson, whether executive or non-executive, be appointed as an NRC member but bars him from chairing it. The option allowing him to chair is therefore wrong.

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