Section 177 - companies act 2013

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Dhaval Lotwala (Querist)
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19 August 2014 Hi,

I need opinion on the following:
Section 177 - Companies Act 2013
1) The Board of Directors of every listed company and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.

(2) The Audit Committee shall consist of a minimum of three directors with independent directors forming a majority:

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

(3) Every Audit Committee of a company existing immediately before the commencement of this Act shall, within one year of such commencement, be reconstituted in accordance with sub-section (2).

(4) Every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include,--........

Queries:
1. Do we need to reconstitute every audit committee by passing a board resolution even if the same is in line with the sub sec (2) of sec 177?

2. Or just obtaining approval from the board for additional responsibilities as per sub-sec (4) is enough?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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19 August 2014 In your case if company is Listed, You have to check clause 49 of the Equity Listing Agreement. Audit commitee constitution must be in confirmity with Clause 49 of the Listing agreement as well.

According to my view, it is desirable to reconstitute the audit commitee so as to incorporate new provisions

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