REGARDING APPLICABILITY OF PROVISIONS RELATED TO AUDIT COMMITTEE AND NOMINATION COMMITTEE

    Posted By : Hemant Gupta / Published on : 24-Nov-2018 04:13 PM / View : 159 / Comment : 1
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    There is a public company, turnover of which was in excess of 200 Crore in the year 2017 but in 2018 it is less than 100 crore, upto which year it is required to comply with provisions of Audit Committee, Nomination Committee, Independent Director and Secretarial Audit is also applicable this year or not ?
    Read more on : committee nomination audit related applicability provisions regarding

    • Dear Sir,

      As per Section 177(1) of the Companies Act, 2013, The Board of Directors of [every listed public company] and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.

      Further, Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014 says, The Board of directors of [every listed public company] and a company covered under rule 4  of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an 'Audit Committee' and a 'Nomination and Remuneration Committee of the Board'.

      Again, Rule 4(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 says, The following class or classes of companies shall have at least two directors as independent directors -

      (i) the Public Companies having paid up share capital of ten crore rupees or more; or

      (ii) the Public Companies having turnover of one hundred crore rupees or more; or

      (iii) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees:

      Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee, such higher number of independent directors shall be applicable to it:

      Provided further that any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later:

      Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions;

      Explanation. - For the purposes of this rule, it is here by clarified that, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be taken into account:

      Provided that a company belonging to any class of companies for which a higher number of independent directors has been specified in the law for the time being in force shall comply with the requirements specified in such law.

      Hence, in my the view if the Company is not falling within the prescribed criteria for three consecutive years then it is not required to comply with the aforesaid provisions until it falls again within the prescribed range.

      10-12-2018 / 04:33:43 PM
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