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    Question

    A company has 1,000 shareholders and its turnover has

    crossed Rs. 50 crores in the previous financial year. The company must now constitute an Audit Committee. Under which section of the Companies Act, 2013 is the constitution of Audit Committee made mandatory?
    A Section 174 Correct Answer Incorrect Answer
    B Section 175 Correct Answer Incorrect Answer
    C Section 177 Correct Answer Incorrect Answer
    D Section 178 Correct Answer Incorrect Answer
    E Section 179 Correct Answer Incorrect Answer

    Solution

    Section 177 of the Companies Act, 2013 deals with "Audit Committee". Sub-section (1) states: "Every company...shall constitute an Audit Committee." The companies covered include: (1) listed companies, (2) any other company with turnover exceeding Rs. 50 crores, and (3) any other company with borrowings exceeding Rs. 25 crores from financial institutions. Section 177 prescribes the constitution, composition (majority independent directors), powers, and responsibilities of the Audit Committee, including reviewing internal audit findings, approving related party transactions, and monitoring auditor independence. Section 174 addresses board quorum, Section 175 addresses directors' responsibilities, Section 178 addresses remuneration committee, and Section 179 addresses nomination committee, but Section 177 specifically addresses Audit Committee.

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