Can a Managing Director be a member of Audit Committee, constituted under section 292A of the Companies Act. 1956? Is ther any legal restriction?
CS RAJESH C.CHOUDHARY
(ASSISTANT MANAGER)
(14607 Points)
Replied 28 September 2011
A whole Time Director can be appointed as a member of Audit Commitee,as long as you comply with sec 292A / clause 49 of the listing agreement as the case may be .
As per section 292A of Companies Act , every public Company having a paid up capital of not less than Rs. 5 Crore shall constitute Audit Committee consisting ofatleast 3 members of which two- third shall be the directors other than managing or whole time director.
In the case of listed Company, clause 49 states that:
For details, you can refer the listing agreement.
Yes, a whole time director can be a member of audit committee if your company having more than two third director other than Managing Director or Whole time director i.e. two director should be independent/non-executive.
All the best.
Abhijeet Deshpande
(Co-Founder & Manager @ Tax-Yantra)
(1171 Points)
Replied 28 September 2011
RG - A Helping Hand
(Company Secretary)
(13867 Points)
Replied 28 September 2011
Provision given in Law:
Section 292A (1): Every public company having paid-up capital of not less than five crores of rupees shall constitute a committee of the Board knows as "Audit Committee" which shall consist of not less than three directors and such number of other directors as the Board may determine of which two thirds of the total number of members shall be directors, other than managing or whole-time directors.
My Analysis:
Minimum members for an Audit committee are 3. Out of these 3 members 2/3 members i.e. 2 members should be simple directors and 1 director can be a MD or WTD.
Hence we may conclude that there is no restriction in section 292A regarding MD being member of Audit committee.
RG
Kalyan Babu Muvva
(M.COM,CA FINAL )
(63 Points)
Replied 28 September 2011
Can any one please Explain ......Suppose if the simple Director has been appointed as the member of Audit Committee after such appointment he turned as Whole Time Director (WTD) is this appointment is valid or not ?
ARUN KUMAR
(Financial Consultant )
(992 Points)
Replied 28 September 2011
AGREE WITH RAJESH..................
RG - A Helping Hand
(Company Secretary)
(13867 Points)
Replied 28 September 2011
Dear kalyan,
Yes his appointment is valid. But you have to check the composition of Audit Committee keeping in view the provisions of section 292A(1).
RG
vikas Agarwal
(Article & Ca Final Student)
(125 Points)
Replied 28 September 2011
agree with arun kumar
ACCOUNTANT
(Student)
(559 Points)
Replied 28 September 2011
AUDIT COMMITTEE CHARTER(of Mindspeed org.)
The Committee shall consist of no fewer than three members. Each member of the
Committee shall meet, as determined by the Board, the independence and other requirements,
including restrictions on compensation and affiliation prohibitions, of The Nasdaq Stock Market
No Committee member shall have participated in the preparation of the financial
statements of the Company or any current subsidiary of the Company at any time during the
prior three years.
But a MD or a WTD will surely participate in the preperation of financial statements
and it may affect the independence requirements of the members of the audit committee.....
meenakshi
(trainee)
(251 Points)
Replied 12 April 2016
Can a manging director be a member of any committee of any other company ???
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 13 April 2016
No.
Committee is the sub committee of the BOard of Directors of the Company only.
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