Securities And Exchange Board Of India - Subsection
Section 18(1) in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
(1)Every listed entity shall constitute a qualified and independent audit committee in accordance with the terms of reference, subject to the following:(a)The audit committee shall have minimum three directors as members.(b)Two-thirds of the members of audit committee shall be independent directors [and in case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/28, dated 29.7.2019 (w.e.f. 2.9.2015).].(c)All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.Explanation (1). - For the purpose of this regulation, "financially literate" shall mean the ability to read and understand basic financial statements i.e. balance sheet, profit and loss account, and statement of cash flows.Explanation (2). - For the purpose of this regulation , a member shall be considered to have accounting or related financial management expertise if he or she possesses experience in finance or accounting, or requisite professional certification in accounting, or any other comparable experience or background which results in the individuals financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.(d)The chairperson of the audit committee shall be an independent director and he shall be present at Annual general meeting to answer shareholder queries.(e)The Company Secretary shall act as the secretary to the audit committee.(f)The audit committee at its discretion shall invite the finance director or head of the finance function, head of internal audit and a representative of the statutory auditor and any other such executives to be present at the meetings of the committee:Provided that occasionally the audit committee may meet without the presence of any executives of the listed entity.
