Committee means a Committee of Directors mandatorily required to be constituted by the Board under the Companies Act. The Board of directors of every listed public company and the following classes of companies shall constitute an Audit Committee
- all public companies with a paid up capital of ten crore rupees or more
- all public companies having turnover of one hundred crore rupees or more
- all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding fifty crore rupees or more. [Section 177(1) and Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014.]
- Section 177 of Companies Act, 2013
- Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014
- Clauses of Secretarial Standard on meetings of Board of Directors(SS-1)
- Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
- Notice should be given in writing to every director of the Committee at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means. [Clause 1.3.1 of Secretarial Standard-1 (SS-1)]
- The Notice should specify the day, date, time and full address of the venue of the Meeting. A Meeting may be convened at any time and place, on any day, excluding a National Holiday. [Clause 1.2 of Secretarial Standard-1 (SS-1)]
- Quorum should be present throughout the Meeting. No business should be transacted when the Quorum is not so present. [Clause 3.1 of Secretarial Standard-1 (SS-1)]
- The Quorum for Meetings of any Committee constituted by the Board shall be as specified by the Board. If no such Quorum is specified, the presence of all the members of any such Committee is necessary to form the Quorum. [Clause 3.5 of Secretarial Standard-1 (SS-1)]
- The Audit Committee shall meet at least four times in a year and not more than 120 days shall elapse between two meetings. [Regulation 18(2)(a) of LODR, 2015]
- For the purpose of Audit committee Meeting, a Director shall be treated as interested in a contract or arrangement entered into or proposed to be entered into by the company
- with anybody corporate, if such Director, along with other Directors holds more than two percent of the paid-up share capital of that body corporate, or he is a promoter, or manager or chief executive officer of that body corporate
- or with a firm or other entity, if such Director or his relative is a partner, owner or Member, as the case may be, of that firm or other entity. [Clause 3.2 of Secretarial Standard-1 (SS-1)]
- Presence of Chairperson shall be required. The Chairperson of the Audit Committee shall be an Independent Director.
- Maintain the Attendance Register with details such as: name of the Committee; place of the Meeting; time of the Meeting; names and signatures of the Directors, the Company Secretary and also of persons attending the Meeting by invitation and their mode of presence, if participating through Electronic Mode.
- Maintain the Minutes Book for Signing the minutes of Previous Committee Meeting by the Chairperson.
Following Procedure is to be followed
- Calling of Audit Committee
- Company shall issue the Notice, Agenda and Notes to Agenda to every Director of the Committee at his address registered with the company not less than seven days before the Meeting, unless the Articles prescribe a longer period. In case the Company sends the Notice, Agenda and Notes to Agenda by speed post or by registered post, an additional two days shall be added for the service of Notice.
- Notice, Agenda and Notes to Agenda are issued by the Company Secretary or where there is no Company Secretary, any Director or any other person authorized by the Board for the purpose.
- Notice shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio visual means, and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio visual means.
- A director intending to participate through video conferencing or audio visual means shall communicate his intention to the Chairperson or the company secretary of the company sufficiently in advance so that company is able to make suitable arrangements in this behalf. [Rule 3(3) of the Companies (Meetings of Board and its Powers) Rules, 2014]
- Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any. [Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)]
- Convening of Audit Committee Meeting
- Check the presence of Quorum for convening the meeting. Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business.
- Check the Leave of absence and the same shall be granted to a Director only when a request for such leave has been communicated to the Company Secretary or to the Chairperson or to any other person authorized by the Board to issue Notice of the Meeting.
- A member of the Committee shall be appointed by the Board or elected by the Committee as Chairperson of the Committee and shall conduct the Meetings of the Committee. If no Chairperson has been so elected or if the elected Chairperson is unable to attend the Meeting, the Committee shall elect one of its members present to chair and conduct the Meeting of the Committee, unless otherwise provided in the Articles.
- Every company shall maintain attendance register for the Committee Meetings and the Chairperson shall take a Roll Call at the commencement of the meeting and confirm the attendance of Directors participating through video conferencing.
- The Chairperson shall request the Director participating through Electronic Mode to state his full name and location from where he is participating and shall record the same in the Minutes. The proceedings of such Meetings shall be recorded through any electronic recording mechanism and the details of the venue, date and time shall be mentioned.
- Directors participating through Electronic Mode shall be deemed to have signed the attendance register, if their attendance is recorded in the attendance register and authenticated by the Company Secretary or where there is no Company Secretary, by the Chairperson or by any other Director present at the Meeting, if so authorized by the Chairperson and the fact of such participation is also recorded in the Minutes.
- If the Chairperson is interested in an item of business, he shall entrust the conduct of the proceedings in respect of such item to any Non-Interested Director with the consent of the majority of Directors present and resume the chair after that item of business has been transacted. However, in case of a private company, the Chairperson may continue to chair and participate in the Meeting after disclosure of his interest.
- The Chairperson shall use his second or casting vote in case of equality of votes.
- Permission of Chairperson shall be taken with the consent of a majority of the Directors present in the Meeting for taking up any item not included in the Agenda. The decision taken in respect of any other item shall be final only on its ratification by a majority of the Directors of the company, unless such item was approved at the Meeting itself by a majority of Directors of the company.
- Check that vote of thanks is given to the Chair at the conclusion of the Audit Committee Meeting.
- Preparation and Signing of Minutes
[Refer the Procedure for Preparation and Signing of Minutes of Board/Committee Meeting].