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Companies Act, 1956 Section 292A
Year : 1956
Section Title : Audit Committee
1[ 292A . Audit Committee
( 1 ) Every public company having paid-up capital of not less than five crores of rupees-shall constitute a committee of the B oard knows as Audit Committee which shall consist of not less than three directors and such number of other directors as the B oard may determine of which two-thirds of the total number of me mbers shall be directors, other than managing or whole-time directors.
( 2 ) Every Audit Committee constituted under sub-section ( 1 ) shall act in accordance with terms of reference to be specified in writing by the B oard.
( 3 ) The me mbers of the Audit Committee shall elect a chairman from amongst themselves.
( 4 ) The annual report of the company shall disclose the composition of the Audit Committee.
( 5 ) The auditors, the internal auditor, if any, and the director-in-charge of finance shall attend and participate at me etings of me Audit Committee but shall not have the right to vote.
( 6 ) The Audit Committee should have discussions with the auditors periodically about internal control systems, the scope of audit including the observations of the auditors and review the half-yearly and annual financial statements before submission to the B oard and also ensure compliance of internal control systems.
( 7 ) The Audit Committee shall have authority to investigate into any matter in relation to the items specified in this section or referred to it by the B oard and for this purpose, shall have full access to information contained in the records of the company and external professional advice, if necessary.
( 8 ) The recommendations of the Audit Committee on any matter relating to financial management including the audit report, shall be binding on the B oard.
( 9 ) If the B oard does not accept the recommendations of the Audit Committee, it shall record the reasons therefor and communicate such reasons to the shareholders.
( 10 ) The chairman of the Audit Committee shall attend the annual general me etings of the company to provide any clarification on matters relating to audit.
( 11 ) If a default is made in complying with the provisions of this section, the company, and every officer who is in default, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to fifty thousand rupees, or with both.]
1. Inserted by Act 53 of 2000, sec. 140 (w.e.f. 13-12-2000).