Constitution of Audit Committee under Section 177 of Companies Act 2013

Constitution-Audit-Committee-Section-177-Companies-Act-2013

Constitution of Audit Committee under Section 177 of Companies Act 2013

Section 177 read with the Companies (Meetings of Board and its Powers) Rules, 2014 provides that:—

Every listed company and certain classes of public companies to constitute an Audit Committee, comprising a minimum of three directors, with Independent Directors forming a majority. Majority of members of Audit Committee including its Chairperson must have the ability to read and understand the financial statement.

Rule 6 provides that the Board of directors of every listed company and the following classes of companies shall constitute an Audit Committee of the Board-

(a) all public companies with a paid up capital of ten crore rupees or more; (b) all public companies having turnover of one hundred crore rupees or more;

(c)all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding fifty crore rupees 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.

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