NASSCOM’s Submission on SEBI’s Consultation Paper on applicability and role of the Risk Management Committee
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Securities and Exchange Board of India (SEBI) recently released a discussion paper to solicit public comments on proposed amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) regarding the applicability and role of the risk management committee.
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. In light of the increasing importance of risk management function, there was a need 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.
Based on inputs from the industry, NASSCOM submitted its response to SEBI. In our submission, we have highlighted that while all the proposed amendments appear to be rationale and beneficial, the role of risk management committee to formulate a detailed policy on systems for internal control could lead to duplication.
Audit committee, which is also a committee of the Board, already has the mandate to look at internal controls and related systems. Therefore, it will be appropriate to leave this role to the Audit Committee in order to avoid duplication and confusion.
We will keep you posted on further developments in this regard.
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