Quick Summary
Audit Committee is a sub-committee of the Board responsible for overseeing financial reporting, audit process, internal controls, and compliance with accounting standards.
Audit Committee is mandated for all listed companies and certain public companies under Section 177 of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. It plays a crucial role in corporate governance and financial oversight.
Composition
- Minimum 3 directors
- Majority must be Independent Directors
- Chairperson must be Independent Director
- Chairperson must be financially literate
- All members must be financially literate (at least one with accounting/finance expertise)
Applicability
- All listed companies (mandatory)
- Public companies with: Paid-up capital ≥ ₹10 crores OR Turnover ≥ ₹100 crores OR Loans/deposits ≥ ₹50 crores
Functions and Powers
- Recommend appointment, remuneration, terms of appointment of auditors
- Review and monitor auditor independence and performance
- Review financial statements before submission to Board
- Oversee internal financial controls and risk management
- Approval or modification of related party transactions
- Scrutinize inter-corporate loans and investments
- Review functioning of whistle blower mechanism
Meetings
- Minimum 4 meetings per year
- Quorum: 2 members or 1/3rd, whichever is greater
- Invite CFO, Statutory Auditors, Internal Auditors to attend
Key Points
- Oversight of financial reporting
- All listed companies must have
- Majority Independent Directors
- Chairperson must be Independent
- Minimum 4 meetings per year