Purpose: The purpose of Section 178 is to establish a Stakeholders Relationship Committee, which will deal with the grievances of the stakeholders of the company.
Applicability: Every listed company or every company having not less than one thousand shareholders, debenture holders, deposit holders, and any other security holders, at any time during a financial year, shall constitute a Stakeholders Relationship Committee.
Timeline: The committee shall meet at least once in a quarter and the maximum gap between two meetings shall not exceed one hundred and twenty days.
Exemption: The provisions of this section shall not apply to a banking company, an insurance company, a housing finance company, or a company engaged in the business of providing finance or loans or institutions engaged in asset financing.
Penalty: If any company contravenes the provisions of this section, the company shall be punishable with a fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Due date: The due date for the constitution of the Stakeholders Relationship Committee shall be within a period of six months from the date of commencement of the companies act, 2013.
Forms: No specific form is required for the constitution of the Stakeholders Relationship Committee.
Reporting Authority: The committee shall report to the board of directors of the company.
Other details:
The Stakeholders Relationship Committee shall consist of a chairperson who shall be a non-executive director and such other members as may be decided by the board.
The chairperson of the committee shall be present at the annual general meeting to answer the shareholders' queries.
The committee shall address the grievances of security holders of the company related to transfer of shares, non-receipt of annual reports, dividends, etc.
