The Board of Directors (“BoD”) of a Public Listed Company and certain specific unlisted Public Companies have to constitute an Audit Committee, where the majority of its members and its Chairman should be able to read and understand financial statements.

Division of Duties: Every Audit Committee is required to act as specified in writing by the BoD and as per the role prescribed under the Companies Act, which include (a) the recommendation for appointment, remuneration etc. of auditors; (b) review and monitoring of auditors and the audit process; (c) examination of financial statements and auditor’s report, and (d) approval of related party transactions of the Company. [...]

Composition: The Audit Committee should consist of minimum 3 BoD members of which the majority have to be IDs (in Listed Companies, 2/3 are to be IDs in certain circumstances).

Appointment/Dismissal Competence: The appointment and removal of member of the Audit Committee is by a Resolution passed by the BoD. An individual ceasing to be a BoD member automatically ceases to be a member of the Audit Committee.

Alternates: Alternates may be appointed following the same procedure as appointment of an alternate BoD member.

NB! The processes for appointment and dismissal of Audit Committee members are not described in more detail at the LCB site.