"The committees are formed as means of improving Board's effectiveness and efficiency in the areas where more focused, specialized and technical discussions are required". Evaluate the statement by bringing out the needs

Committees are usually formed as a means of improving board effectiveness and efficiency, in areas where more focused, specialized and technical discussions are required. These committees prepare the groundwork for decision-making and report at the subsequent board meeting. Committees enable better management of full board's time and allow in-depth scrutiny and focused attention. Board committees are pillars of corporate governance. Board committees with formally established terms of reference, criteria for appointment, life span, role and function constitute an important element of the governance process and should be established with clearly agreed reporting procedures and a written scope of authority. A Board can either delegate some of its powers to the committee, enabling it to act directly, or can require the recommendations of the committee to be approved by the Board. Committees thus enable better management of the board's time and allow in-depth scrutiny and focused attention. Thus Committees have the following important roles: to strengthen the governance arrangements of the company and support the Board in the achievement of the strategic objectives of the company; to strengthen the role of the Board in strategic decision making and supports the role of non-executive directors in challenging executive management actions; to maximise the value of the input from non-executive directors, given their limited time commitment; to support the Board in fulfilling its role, given the nature and magnitude of the agenda. Committees should have clear goals, objectives, and terms of reference in order to function efficiently, and Boards should ensure that these are developed before establishing the committee. Many committees have been known to work outside their intended purpose due to a lack of precise objectives. Significance of Board Committees To improve Board effectiveness and efficiency. Minor details needs to be evaluated/ analysed to arrive at a logical conclusion- This requires body having expertise in subject matter, a Board Committee shall in such cases assist the Board and give well considered recommendations to the Board. Insulate Board from potential undue influence of controlling shareholders and managers. Committees prepare groundwork for decision making and submit their recommendations to the Board for decision making. Enables better management of Board's time and allows in-depth scrutiny of proposals. Establishing committees is one way of managing the work of the Board and strengthening the Board's governance role.