3.1.3 Committees and Their Functions
Committees and Their Functions
To efficiently manage its responsibilities, the Board of Directors often delegates specific tasks to various committees. Common board committees include:
Audit Committee: This committee is responsible for overseeing the company's financial reporting, internal controls, and compliance with legal and regulatory requirements. It works closely with internal and external auditors.
Remuneration/Compensation Committee: This committee determines the compensation packages for the CEO and senior executives. It ensures that remuneration policies are aligned with the company's long-term interests and are fair and competitive.
Nomination and Governance Committee: This committee is responsible for board composition and governance practices. It identifies and nominates suitable candidates for board positions, ensures that the board functions effectively, and oversees the implementation of corporate governance policies.
Risk Management Committee: This committee focuses on identifying and managing the company's risks. It develops risk management policies, monitors risk exposures, and ensures that risk mitigation strategies are in place.
Corporate Social Responsibility (CSR) Committee: In some companies, there is a dedicated committee to oversee CSR activities. This committee ensures that the company engages in socially responsible activities and aligns with sustainable development goals.
These committees enhance the board's efficiency by allowing specialized groups to focus on specific areas, providing detailed oversight, and making informed recommendations to the full board.