Constitution
of Audit Committee
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 :
2013 read with Rule 6 require the constitution of audit committee by :
i.
all listed companies; and
all listed companies; and
ii.
all public companies
all public companies
o with
a paid up capital of Rs.10 Crores or more;
a paid up capital of Rs.10 Crores or more;
o having
turnover of Rs.100 Crores or more;
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.
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.
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.
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Composition
of Audit Committee
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.
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.
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:
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,—
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;
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;
monitor the auditor’s independence and performance, and
effectiveness of audit process;
(iii) examination of the financial
statement and the auditors’ report thereon;
statement and the auditors’ report thereon;
(iv) approval or
any subsequent modification of transactions of the company with related
parties;
any subsequent modification of transactions of the company with related
parties;
(v) scrutiny of inter-corporate loans
and investments;
and investments;
(vi) valuation of
undertakings or assets of the company, wherever it is necessary;
undertakings or assets of the company, wherever it is necessary;
(vii) evaluation of
internal financial controls and risk management systems;
internal financial controls and risk management systems;
(viii) monitoring the
end use of funds raised through public offers and related matters.
end use of funds raised through public offers and related matters.
Powers
of Audit Committee:
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
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.
and the management of the company.
3. To investigate into any matter in relation to the items or referred to
it by the Board
it by the Board
4.
To obtain professional advice from external sources
To obtain professional advice from external sources
5.
To have full access to information contained in the records of the
company.
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 :
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 :
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
……………..
Shri
……………..
2.
Shri ……………..
Shri ……………..
3.
Shri ……………..
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.
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.
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:
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;
and terms of appointment of auditors of
the company;
(ii) review and monitor the auditor’s
independence and performance, and effectiveness of audit process;
independence and performance, and effectiveness of audit process;
(iii)
examination of the financial statement and the auditors’ report thereon;
examination of the financial statement and the auditors’ report thereon;
(iv) approval or any subsequent modification of transactions of the company
with related parties;
with related parties;
(v) scrutiny of inter-corporate loans and investments;
(vi)
valuation of undertakings or assets of the company, wherever it is
necessary;
valuation of undertakings or assets of the company, wherever it is
necessary;
(vii)
evaluation of internal financial controls and risk management systems;
evaluation of internal financial controls and risk management systems;
(viii)monitoring the end use of funds raised
through public offers and related matters.
through public offers and related matters.
(ix) any
other responsibility as may be assigned by the board from time to time.
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.