Committees Formed Under The Companies Act, 2013

Committees Formed Under The Companies Act, 2013


Committees Formed Under The Companies Act, 2013:


When assistance is required by the Board of Directorspertaining an issue or regarding the company governance, then is such cases a committee is set up. Committees play an important role in the governing of the companies. They carefully look into the matter and try to resolve the issue. Committees are formed either for a short term period or a long term period depending upon the situation. The Board also has the right to delegate some of its powers to the Committee to function smoothly and properly. As per Schedule I of the Companies Act, a chairperson may be elected by the Board.

Various Committes Under The Companies Act, 2013:

1.CSR Committee:

CSR stands for Corporate Social Responsibility. This committee is incorporated under sec 135 of the Act. Every company having a net worth of Rs. 500 crores, turnover of Rs. 1000 crores and profit of Rs. 5 crores shall contribute at least 2% of it towards the welfare of the society.

The functions of this committee include suggesting a CSR policy to the Board according to the Act, to recommend the amount for the policy, have a transparent mechanism regarding CSR, etc.

2.Audit Committee:

A company having a paid up capital of 10 crores, turnover of 100 crores or outstanding loans of 50 crores shall constitute an Audit committee. The last audited financial statements shall be taken into account. It is set up under sec 177 of the Act. It will check whether all the compliances have been followed by the company or not. It consists of minimum 3 Directors and Chairman with other members.

The functions of this committee is to inspect any subject, discuss the issues relating to the management of the company, to recommend and appoint the auditor of the company and decide the remuneration for the same, to see that a vigil mechanism is established, obtaining advice from outer sources, etc.

3.Nomination And Remuneration Committee:

A company having a paid up capital of 100 crores and an outstanding loan of Rs 50 crores shall constitute this committee and it shall be constituted by the Board of Directors of every listed company. Three or more non-executive Directors out of which not less than one half are supposed to be the independent Directors is the essential requirement. This committee is set up under sec 178(1) of the Act.

The functions of this committee includes to check the structure and remuneration package and to review the changes, plans for the Directors and appoint them who are qualified or can be appointed in the senior management and to get information about the employees etc.

4.Stakeholders Relationship Committee:

This committee shall have one chairperson as decided by the Board as per the Companies Act. It can be set up by a company holding 1000 number of shareholders, debenture, deposit and any other security holders in a financial year. It is mainly constituted to redress the grievances of the stakeholders.

The functions of this committee include resolving the grievances of security holders, investor complaints, process of share transfers etc.


Thus, there are different types of committees that are mandatorily set up under the Companies Act, 2013 for various purposes and for the efficient functioning of the company and redressing the issues faced by them.

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