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Format of Board Resolution for Constitution of Audit Committee

Every listed public company and certain other class of companies are required to form an Audit Committee of the Board of Directors.

Refer the detailed provisions mentioned under the following section and rules:

• Section 177 of the Companies Act, 2013
• Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014
• Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014
• Part C of the Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Following is a template of board resolution for constitution of an audit committee of the board. Modify it suitably as per your requirement.

SAMPLE

#. To Constitute an Audit Committee of the Board

The Board was informed that an Audit Committee of the Board is required to be constituted as the company falls under the criteria of the class of companies as specified under section 177 of the Companies Act, 2013. The Board discussed and considered the same.

Upon motion duly passed and seconded, it was:

“RESOLVED THAT a Committee of the Board in the name and style of 'Audit Committee' be constituted with the following members:

1. Ms. ........................., (Designation);
2. Mr. ........................., (Designation); and
3. Mr. ........................., (Designation).

RESOLVED FURTHER THAT any member of the Audit Committee may be removed or replaced at any time by the Board and that any member of the Audit Committee ceasing to be a director shall be ceased to be a member of the Audit Committee.

RESOLVED FURTHER THAT the members of the Audit Committee shall elect a Chairperson amongst themselves.

RESOLVED FURTHER THAT (Name of the CS), Company Secretary of the company shall act as the Secretary of the Audit Committee.

RESOLVED FURTHER THAT the Audit Committee shall act in accordance with the terms of reference, a copy of which was tabled before the Board and initialed by the Chairman for the purpose of identification.

RESOLVED FURTHER THAT the Audit Committee be and is hereby vested with the following roles and responsibilities:
• recommending the appointment, remuneration and terms of appointment of auditors of the company;
• reviewing and monitoring auditor’s independence and performance, and effectiveness of the audit process;
• examining financial statement and the auditors’ report thereon;
• scrutinizing inter-corporate loans and investments;
• evaluating internal financial controls and risk management systems;
• monitoring the end use of funds raised through public offers and related matters;
• valuation of undertakings or assets of the company, wherever it is necessary;
• approval or any subsequent modification of transactions of the company with related parties;
• investigating into any matter in relation to the above items or as referred to it by the Board;
• any other responsibilities as may be assigned by the Board from time to time.

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