Consultation paper of SEBI on Risk Management Committee issued
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with proposed amendments regarding the applicability and role of the risk management committee, a consultation paper has been issued for public comments.
2.1.
In June 2017, a committee on corporate governance headed by Shri. Uday Kotak was constituted by SEBI with an aim to improve the standards of Corporate Governance of listed entities. Based on the recommendations of the Committee, the following amendments were made to LODR Regulations with respect to the Risk Management Committee:
- The requirement of constitution of Risk Management Committee was extended to the top 500 listed entities on the basis of the market capitalization, from the top 100 listed entities.
- In view of the increasing relevance of cyber security and related risks, it was specified that the role of Risk Management Committee shall cover this specific aspect of cyber security risk.
- The Risk Management Committee was mandated to meet at least once a year.
2.2.
Considering the multitude of risks faced by listed entities, risk management has emerged as a very important function of the board. The Covid 19 pandemic has also reinforced the need for a robust risk management framework. While LODR Regulations specify the role of various board committees of listed entities such as Audit Committee, Nomination and Remuneration Committee and Stakeholder Relationship Committee, defining the role and responsibilities of the Risk Management Committee (except for cyber security risk) is left to individual boards of listed entities.
2.3.
In light of the increasing importance of the risk management function, a need is thus felt to:
- Extend the requirement of formation of a Risk Management Committee to a larger number of listed entities
- Define the role and responsibilities of the Risk Management Committee in the LODR Regulations and
- Increase the frequency and define a quorum for the meetings of the Risk Management Committee.
The details regarding the modifications in the role of the committee, the consultation paper could be referred at the below mentioned link
