Board Committees Expanding Oversight Functions
1. Meaning of Board Committees and Oversight Functions
Board Committees are specialised sub-groups of the board constituted to:
Assist the board in discharging its functions efficiently
Provide focused oversight in complex or technical areas
Oversight functions refer to the committee’s role in:
Monitoring management actions
Ensuring legal and regulatory compliance
Managing risks and protecting stakeholder interests
In modern corporate governance, committee oversight has expanded far beyond routine compliance.
2. Statutory Framework Governing Board Committees in India
(a) Companies Act, 2013
Section 177 – Audit Committee
Section 178 – Nomination & Remuneration Committee (NRC) and Stakeholders Relationship Committee
Section 135 – CSR Committee
Section 179 – Powers of Board (delegation to committees)
(b) SEBI (LODR) Regulations, 2015 (Listed Companies)
Regulation 18 – Audit Committee
Regulation 19 – NRC
Regulation 20 – Stakeholders Relationship Committee
Regulation 21 – Risk Management Committee
Regulation 24 – Subsidiary Oversight
3. Evolution of Committee Oversight in India
Traditional Role
Financial reporting
Director remuneration
Shareholder grievances
Expanded Role
Enterprise risk management
Cybersecurity and data protection
ESG and sustainability oversight
Related party transactions
Whistleblower mechanisms
Group governance and subsidiary monitoring
4. Key Committees and Their Expanded Oversight Functions
(A) Audit Committee
Expanded Oversight Includes:
Internal financial controls
Related party transactions
Fraud risk management
Forensic audits
Whistleblower complaints
Cyber and IT risks
Legal Basis:
Section 177
Regulation 18
(B) Nomination and Remuneration Committee (NRC)
Expanded Oversight Includes:
Board succession planning
Director skill matrix
Board evaluation frameworks
Independence assessment
(C) Risk Management Committee (RMC)
Expanded Oversight Includes:
Enterprise risk mapping
ESG and climate risks
Business continuity planning
Regulatory change monitoring
(D) CSR Committee
Expanded Oversight Includes:
Impact assessment
ESG integration
Anti-greenwashing controls
(E) Stakeholders Relationship Committee
Expanded Oversight Includes:
Investor grievance redressal
Market conduct monitoring
Shareholder activism management
5. Legal Principles Governing Expanded Committee Oversight
Delegation does not mean abdication
Committees act as extensions of the board
Fiduciary duties apply equally
Increased oversight = increased accountability
Substance over form governs liability
6. Judicial Perspective: Case Laws Supporting Expanded Oversight Accountability
1. N. Narayanan v. SEBI
(Supreme Court)
Principle:
Directors must exercise due diligence and oversight.
Ignorance is not a defence.
Relevance:
Committees cannot avoid liability by claiming advisory roles.
2. SEBI v. Shriram Mutual Fund
(Supreme Court)
Principle:
Strict liability for regulatory failures.
Relevance:
Committees overseeing compliance bear responsibility for lapses.
3. Official Liquidator v. P.A. Tendolkar
(Supreme Court)
Principle:
Negligent directors may be personally liable.
Relevance:
Committee members with expanded oversight must act vigilantly.
4. Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan
(Supreme Court)
Principle:
Abuse of power and lack of probity invite judicial intervention.
Relevance:
Committees must prevent management excesses.
5. S. P. Jain v. Kalinga Tubes Ltd.
(Supreme Court)
Principle:
Courts intervene where governance structures enable oppression.
Relevance:
Committees act as internal checks against misuse of control.
6. Chander Krishan Gupta v. Pannalal Girdharlal Pvt. Ltd.
(Delhi High Court)
Principle:
Passive oversight violates fiduciary obligations.
Relevance:
Expanded committee mandates require active supervision.
7. Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd.
(NCLAT / Supreme Court)
Principle:
Board processes and committee roles affect legitimacy of decisions.
Relevance:
Committees must function within clear mandates and governance balance.
7. Risks of Expanding Committee Oversight
Over-delegation by the board
Committee fatigue
Blurred accountability
Excessive reliance on management inputs
Increased director liability
8. Governance Safeguards for Effective Oversight Expansion
Clearly defined committee charters
Periodic review of committee mandates
Skill-based committee composition
Independent access to information
Regular reporting to full board
9. Best Practices in Indian Companies
Annual committee performance evaluation
Integration of ESG and cyber risk into committee agendas
Use of external experts for specialised oversight
Enhanced disclosure of committee activities
Alignment with board evaluation outcomes
10. Conclusion
Board Committees Expanding Oversight Functions reflect the maturing of Indian corporate governance, but with expansion comes heightened accountability.
Indian law and jurisprudence consistently affirm that:
Oversight delegated is not oversight diluted—responsibility follows power.
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