What is the correct composition for an audit committee and remuneration committee?

The audit committee and remuneration committee are integral components of corporate governance, designed to enhance the accountability and transparency of an organization's operations. The correct composition of these committees is predominantly comprised of Non-Executive Directors (N.E.Ds).

Having only N.E.Ds on these committees is beneficial because they offer independent oversight, free from the influence of the company's daily operations. This independence is crucial for the audit committee, which is tasked with overseeing financial reporting and ensuring the integrity of financial statements. A committee composed solely of N.E.Ds can provide unbiased evaluations of the company's financial practices and internal controls, fostering greater trust among investors and stakeholders.

Similarly, the remuneration committee focuses on setting and reviewing executive pay and performance incentives. When composed entirely of N.E.Ds, it can ensure that remuneration decisions are made without conflicts of interest that could arise if executive directors were involved. This can help maintain alignment between executive compensation and shareholder interests.

Options that involve equal representation of executive directors and N.E.Ds dilute the independence that is essential for effective oversight in both committees. Involving only executive directors compromises the objectivity required in critical evaluation tasks related to financial and remuneration matters. Lastly, having equal representation of shareholders and executives could lead to conflicts and may not provide the