Guidance for committee formation

A Board can set up committees with particular terms of reference when it needs assistance or when an issue requires more resources and attention.
A Board can either delegate some of its powers to the committee, enabling it to act directly, or can require the recommendations of the committee to be approved by the Board. The Board will normally depend heavily on the findings and recommendations of its committees, although final decisions to accept or reject these recommendations will be made by the Board. Committees thus have an important role to play in company governance. According to the provisions of the Companies Act, 2013, formation of committees of the Board is mandatory when companies fall under the prescribed threshold. A few examples are:

• Nomination & Remuneration Committee
• Audit Committee
• Corporate Social Responsibility Committee
• Risk Management Committee