Committee of Directors for allotment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 Dear All,

In a company there are 4 members in a Committee of Director for allotment of shares under ESOS scheme.
The 4 members are as follows:
2 Independent Directors
1 executive director
& 1 Managing Director.
The quorum for the meeting is 2 Directors.

Is it valid if ED & MD (2 WTD) of the Company hold the meeting without involving an independent director and allot shares to the employees.

What is the shares are to be allotted to ED or MD is presence of independent director needed in the meeting?

Please clarify the doubt.

Ankur Garg

Ankur Garg (Expert)
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17 August 2010 Your composition of ESOP Compensation committee is fine. I would advise you to designate ID as chairman of committee to maintain transparency.

Further you can allot ESOP with ED and MD as long as quorum is present.

It is always better to convene meeting with ID.

Wait for other expert opinion.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 Thanks Ankur,
One ID is the chairman and also what if the ED or MD has to apply for the shares in that meeting. Then will the presence of ID be compulsory?

Yes shall take other opinion too.

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 a

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 Hey one more doubt...

Can a committee be formed with executives of the Company (No directors as members) is it possible?

I dont think so... Please support your answer.
Can it be done for NCD allotment?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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19 July 2024 Yes, it is possible for a committee to be formed with executives of a company, even if no directors are members of that committee. Committees within a company serve various purposes and can be constituted to handle specific tasks or responsibilities delegated by the board of directors or management.

Here are some key points to consider:

1. **Authority to Form Committees**: The authority to form committees is typically vested in the board of directors or sometimes in the management of the company, depending on the company's organizational structure and governance framework.

2. **Types of Committees**: Companies often form various committees such as audit committees, compensation committees, risk management committees, etc. These committees may include directors, executives, or even external experts depending on the committee's mandate.

3. **Executive Committees**: An executive committee typically consists of senior executives of the company, such as the CEO, CFO, COO, etc. This committee may be tasked with making operational decisions, strategic planning, or other management functions.

4. **Composition and Governance**: While committees can include executives and non-directors, the composition and governance of these committees should align with regulatory requirements, if applicable, and the company’s articles of association or bylaws.

5. **Responsibilities and Oversight**: Committees, regardless of their composition, are accountable to the board of directors or management for their actions and decisions. They operate within the framework set by the board or management and are subject to oversight and reporting requirements.

### Conclusion
In summary, forming a committee with executives (and without directors) is permissible and often practical depending on the specific needs and objectives of the company. However, the formation and operation of such committees should adhere to legal requirements, governance guidelines, and the company’s internal policies to ensure transparency, accountability, and effective functioning.

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