The provision of Sec 292A of the Companies Act, 1956 regarding the constitution and functioning of an audit committee:
1. Every public co having paid up capital of not less than 5 crores of rupees shall constitute a committee of the Board known as "Audit committee".
2. The committee shall constitute of not less than three directors of which at least two thirds should be directors other than Managing and Whole time director.
3. The memebers of the committee shall elect a chairman amongst themselves. The chairman should be present at the AGM to provide any clarification on the audit.
4. The auditor, internal auditors, if any, and the director in charge of finance shall participate at the committee meetings but shall have no right to vote.
5. The committee shall have the powers to investigate into the affairs of the company and for this purpose shall have access to records of the co and external professional advice.
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