Section 177. Audit committee
(1) The Board of Directors of every listed public company and such other 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. The majority of members, including its chairperson, shall be persons with ability to read and understand financial statements.
(3) Every Audit Committee existing before commencement of this Act shall be reconstituted in accordance with this section within the prescribed period.
(4) The Audit Committee shall act in accordance with terms of reference specified by the Board, including recommendations on appointment and remuneration of auditors; review of auditor independence and performance; examination of financial statements and audit reports; approval or modification of related-party transactions subject to the Act; scrutiny of inter-corporate loans and investments; valuation of undertakings or assets; evaluation of internal financial controls and risk management systems; and monitoring end use of funds raised through public offers.
(5) The Committee may call for comments of auditors, review internal controls and financial statements before submission to the Board and discuss related issues with internal and statutory auditors and management.
(6) The Committee may investigate matters within its terms of reference, obtain professional advice and have full access to company records.
(7) Auditors and key managerial personnel have a right to be heard when the Committee considers the auditor’s report but have no right to vote.
(8) The Board’s report shall disclose the composition of the Committee and reasons where the Board has not accepted its recommendation.
(9) Every listed company or prescribed class shall establish a vigil mechanism for directors and employees to report genuine concerns.
(10) The vigil mechanism shall provide safeguards against victimisation and direct access to the chairperson of the Audit Committee in appropriate cases, and its details shall be disclosed on the website and in the Board’s report.
