as per companies amendment act 2017 only listed public companies will be required to form audit committee ..but as per LOADR which is applicable to any listed alentity who have listed any of specified security ( say non convertable deb.) , every such entity is required to create audit committee .
query:- in case pvt. co. has listed its non convertible deb. on recognise stock exchange then will it be required to have audit committee.?
15 Replies
Nikhil Bhanushali
(CA Final)
(142 Points)
Replied 06 June 2018
No audit committe is not required and private co. Can form audit committe if they need ...read section 177 of companies act 2017 and rule 6 and 7. It is purely applicable to listed company and companies which has been mentioned in section
Aditi
(Student)
(389 Points)
Replied 06 June 2018
actually m not talking only about companies act 2013 . as per companies act Pvt co is not requires, but what about loadr.? which is applicable on any entity whi has kisted its specified sec. say for example pvt com has listed its non convertible deb then as per loadr will it be req to form audit commm.?
Kunal Shah
(43 Points)
Replied 06 June 2018
As per LODR , Regulation 18 , it is applicable only to Listed company which has listed its specified securities.
Kunal Shah
(43 Points)
Replied 06 June 2018
since it is applicable to only Listed Companies...Pvt limited company doesn't require to form an audit committee & Specified securities covers “Designated Securities” i.e non-convertible debt securities, non-convertible redeemable preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts, securitised debt instruments, units issued by mutual funds and any other securities as may be specified by the Board. [Regulation 2(1)(h) of SEBI (LODR) Regulations, 2015]
Aditi
(Student)
(389 Points)
Replied 06 June 2018
and what if a pvt com has listed its privately placed non convertible debentures on any recognised stock exchange ..?
Kunal Shah
(43 Points)
Replied 06 June 2018
then too it won't be applicable...as it is not a listed company
Aditi
(Student)
(389 Points)
Replied 06 June 2018
as per companies act any company which has listed any of its security on stock exchange is listed.. is there separate definition of listed company as per sebi ?
Kunal Shah
(43 Points)
Replied 06 June 2018
Can I know pvt limited company have listed what kind of securites ?
Aditi
(Student)
(389 Points)
Replied 06 June 2018
like its privately placed non convertible debentures
Kunal Shah
(43 Points)
Replied 06 June 2018
Yeah sorry Companies Act Listed company defination will get attracted as any security listed on stock exchange is listed co and yeah all the regulation related to listed company in companies act need to follow.Hence this company will be require to form Audit Committee. Still Little doubt on this..Do confirm
Aditi
(Student)
(389 Points)
Replied 07 June 2018
yeah thats what i wanted to know .. audit committee requires 3 director minimum and independent director..but what if that pvt co has 2 dir only
Kunal Shah
(43 Points)
Replied 07 June 2018
Yeah but we need to understand the intention of law with respect to forming audit committee or appointing Independent director. Any one can argue to comply with the provision as it get covers in the defination of listed company. The concept of
appointing an independent director was introduced for enhancing corporate
governance in the company. To strictly adhere with the letter of law, one is
compelled to say that private debt-listed companies should also appoint
independent directors. However, going by
the overarching spirit of law, one needs to a take prudent call in this regard
to say that private listed companies need not appoint independent directors.
This is also backed by the fact that the debt listing agreement does not
require independent directors to be appointed on the board of a private listed
company. We must think in broader sense. Clarification should come out for such matter soon.
appointing an independent director was introduced for enhancing corporate
governance in the company. To strictly adhere with the letter of law, one is
compelled to say that private debt-listed companies should also appoint
independent directors. However, going by
the overarching spirit of law, one needs to a take prudent call in this regard
to say that private listed companies need not appoint independent directors.
This is also backed by the fact that the debt listing agreement does not
require independent directors to be appointed on the board of a private listed
company. We must think in broader sense. Clarification should come out for such matter soon.
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