Draft Board Resolution for Constitution of Audit Committee

     

Constitution of Audit Committee

The provisions of section Section 177(1) of the Companies Act, 2013 read with Rule 6 require the constitution of audit committee by :

       i.            all listed companies; and

     ii.            all public companies

                        o     with a paid up capital of Rs.10 Crores or more;

                        o     having turnover of Rs.100 Crores or more;

                       o    having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding Rs.50 Crores or more.

The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule.

Composition of Audit Committee

    I.   The Audit Committee shall consist of a minimum of 3 directors with Independent Directors forming a majority.

     ii.      The majority of members of Audit Committee including its Chairperson shall be persons with ability to read and understand, the financial statement.

 iii. The Board’s report under section 134(3) of the Act shall disclose the composition of an Audit committee and where the Board had not accepted any recommendations of the Audit Committee, the same shall be disclosed in the report along with the reasons.

Functions of Audit Committee:

Every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include,—

(I)     the recommendation for appointment, remuneration and terms of appointment of auditors of the company;

(ii) review and monitor the auditor’s independence and performance, and effectiveness of audit process;

(iii)   examination of the financial statement and the auditors’ report thereon;

(iv)  approval or any subsequent modification of transactions of the company with related parties;

(v)    scrutiny of inter-corporate loans and investments;

(vi)   valuation of undertakings or assets of the company, wherever it is necessary;

(vii)  evaluation of internal financial controls and risk management systems;

(viii) monitoring the end use of funds raised through public offers and related   matters.

Powers of Audit Committee:

The Audit committee shall have the authority –

1.          To call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board

2.      To discuss any related issues with the internal and statutory auditors and the management of the company.

3.         To investigate into any matter in relation to the items or referred to it by the Board

4.                To obtain professional advice from external sources

5.                To have full access to information contained in the records of the company.

Draft Board Resolution For Constitution of Audit Committee

To comply with the provisions of section 177 of the Companies Act, 2013 and Rule 6 of the Companies (Meeting of board and its powers) Rules, 2014 board has accorded its consent to constitute the Audit Committee and passed the following resolutions in this regard :

RESOLVED THAT in pursuance of the provisions of section 177 of the Companies Act, 2013 a Committee of the board of directors be and is hereby constituted to be called as “Audit Committee” with the following members :

1.   Shri ……………..

2.   Shri ……………..

3.   Shri ……………..

FURTHER RESOLVED THAT any member of this Committee may be removed or replaced at any time by the Board. Any member of this committee ceasing to be a director shall also be ceased to be a member of the Audit Committee.

FURTHER RESOLVED THAT the members of this committee shall elect a Chairperson amongst themselves.

FURTHER RESOLVED THAT the committee be and is hereby vested with the following roles and responsibilities:

(i)      the recommendation for appointment, remuneration and terms of appointment of  auditors of the company;

(ii) review and monitor the auditor’s independence and performance, and effectiveness of audit process;

(iii)   examination of the financial statement and the auditors’ report   thereon;

(iv)  approval or any subsequent modification of transactions of the company with related parties;

(v)    scrutiny of inter-corporate loans and investments;

(vi)   valuation of undertakings or assets of the company, wherever it is necessary;

(vii)  evaluation of internal financial controls and risk management systems;

(viii)monitoring the end use of funds raised through public offers and related matters.

(ix)   any other responsibility as may be assigned by the board from time to time.

FURTHER RESOLVED THAT ………….. be and is hereby authorised to do all such acts, deeds and things which may be necessary for giving effect to this resolution.

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