(1)The Board of Directors of 1[every listed public company] and such other
class or classes of companies, as may be prescribed, shall constitute an Audit Committee.
(2)The Audit Committee shall consist of a minimum of three directors with independent directors
forming a majority:
Provided that majority of members of Audit Committee including its Chairperson shall be persons with
ability to read and understand, the financial statement.
(3)Every Audit Committee of a company existing immediately before the commencement of this Act
shall, within one year of such commencement, be reconstituted in accordance with sub -section ( 2).
(4)Every Audit Committee shall act in accordance with the terms of reference specified in writing by
the Board which shall, inter alia, include, -
(i)the recommendation for appointment, remuneration and terms of appointment of auditors of the
company;
(ii)review and monitor the auditor’s independence and performance, and effectiveness of audit
process;
(iii)examination of the financial statement and the auditors’ report thereon;
(iv)approval or any subsequent modification of transactions of the company with related parties: