Legal Definitions - authorized committee

An authorized committee is a group of individuals officially sanctioned or given specific permission by a larger body to perform a particular task, investigate a matter, or make a decision on its behalf. This larger body could be a board of directors, a legislative assembly, a court, or another governing entity. The committee's authority and scope are typically defined by the body that creates it, and its members are expected to act within that mandate.

In corporate law, an authorized committee is often formed by a company's board of directors, frequently composed of independent directors, to investigate allegations of wrongdoing against other directors or officers. Such a committee, sometimes called a Special Litigation Committee, is authorized to determine whether pursuing a lawsuit (often a shareholder derivative suit) is in the best interest of the corporation.

• Example 1 (Corporate Governance): A group of shareholders files a lawsuit against the CEO and several board members, alleging that their recent business decisions caused significant financial harm to the company. To address these serious claims, the company's board of directors forms an independent special committee, composed of directors who are not implicated in the lawsuit. This committee is formally authorized by the full board to conduct a thorough investigation into the allegations, interview witnesses, review internal documents, and ultimately recommend whether the corporation should pursue or dismiss the lawsuit. The committee's authorization gives it the power to act on behalf of the corporation in this specific matter.

• Example 2 (Governmental Oversight): Following a series of public complaints about the procurement process for a new municipal infrastructure project, the city council passes a resolution establishing an ad hoc investigative committee. This committee, comprising several council members and a few external experts, is formally authorized to review all contracts, financial records, and communications related to the project. Its mandate includes interviewing city officials and contractors, and then presenting a report with findings and recommendations for improving transparency and accountability in future projects. The committee's authority stems directly from the city council's official resolution.

• Example 3 (Non-Profit Organization): A large charitable foundation receives an anonymous whistleblower complaint alleging financial impropriety by its executive director. The foundation's board of trustees convenes and decides to form an ethics review committee. This committee, consisting of three independent trustees and an external forensic accountant, is formally authorized by the board to conduct a comprehensive audit of the foundation's finances and investigate the specific allegations. The committee is empowered to access all financial records, conduct interviews with staff, and ultimately report its findings and recommendations directly to the full board for appropriate action. The board's formal approval grants the committee its specific powers and responsibilities.