Audit Committee, Board and General Meeting under Companies Act, 2013 N. Palaniappan, B.Com., LL.B., F.C.S., A.C.M.A., Company Secretary & Sr. Manager – Finance Blue Dart Aviation Limited

COMMITTEES 1.Audit Committee 2.Nomination & Remuneration Committee 3. CSR Committee 4. Stakeholders relationship Committee

AUDIT COMMITTEE (SEC 177)

Which Companies needs to have an Audit Committee? Listed Companies or All public companies with a paid-up share capital of Rs.10 cr. or more All public companies having turnover of Rs.100 cr. or more All public Companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding Rs.50 cr. or more

AUDIT COMMITTEE The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements should be considered. There is no requirement for Private Limited Company to constitute this Committee.

CONSTITUTION OF AUDIT COMMITTEE Minimum three Directors required. Incase of public unlisted companies Independent Director should form the majority. Incase of listed Companies, 2/3rd of members of Audit Committee shall be independent Directors. Majority of Directors including Chairperson should have ability to read and understand the financial statement. Incase of listed Company, all members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.

FUNCTIONS Recommendation for appointment of Auditors(including Cost Auditors). Recommendation of Remuneration payable to Auditors. Review and monitor the auditor’s independence and performance. Examination of financial statement before submission to board. Approval or subsequent modification of related party transaction. Scrutiny of Inter-corporate loans and investments.

FUNCTIONS Evaluation of internal financial controls and risk management system; Monitor the end use of funds raised through public offer and related matters. To formulate Whistle Blower Policy. To monitor and resolve issues reported through Whistle Blower Policy.

Internal Financial Controls Board of Directors needs to comment on their Directors Report about internal Financial Control with reference to the Financial Statement. Statutory Auditors are required to make statement in their Auditors Report, whether the Company has Adequate IFC in place and the operating effectiveness of Such Control. Independent Directors shall satisfy themselves on the integrity of financial information and that financial controls and the system of risk management are robust and defense (Schedule IV).

What Companies are required to do? 1. Define Process level Policies and Procedures. 2. Develop a Delegation of Authority. 3. Identify Key and Non-Key Controls. 4. Document all existing financial controls. 5. Monitor effectives of existing controls. 6. Introduce new controls, if required. 7. Automate the Routine activities to reduce the manual errors.

EXPECTATION

BOARD MEETING

NOTICE Unless articles prescribes a longer period, Agenda needs to be sent 7 days in advance. Incase of agenda is sent by Post, then it needs to be sent 9 days in advance. The Notice shall specify the serial number, day, date, time and full address of the venue of the Meeting. Every Meeting shall have a serial number. Notice to be served by way of physical or electronic mode at the address provided by the Director of the Company or at such address as it appears in DIN.

NOTICE Notice shall be issued by the Company Secretary or where there is no Company Secretary, any Director or any other person authorised by the Board for the purpose. A Meeting may be convened at any time and place, on any day,excluding a National Holiday. National Holiday includes Republic Day, Independence Day and Gandhi Jayanthi and Such other day as may be declared as National Holiday by the Central Government. “Unpublished Price Sensitive Information” can be given at shorter notice with consent of majority of Directors which include one independent Director.

UNPUBLISHED PRICE SENSITIVE INFORMATION It means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to material affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following. Financial results Dividends Change in Capital Structure Mergers,DeMergers,Acquisitons,Delistings,Disposals and Expansion of business and such other transactions Changes in KMP Material events in accordance with the Listing Agreement.

FREQUENCY OF BOARD MEETING Once in every calendar quarter; Maximum gap between two meeting should not exceed 120 days; Atleast four meetings in a year. OPC, Small Company or Dormant Company needs to hold atleast 1 meeting in each half of a calendar year and gap between two meetings is not less than 90 days. If Company has independent directors, then, meeting of independent directors once in a calendar year.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; General Business Items Noting Minutes of Meetings of Audit Committee and other Committees. Approving financial statements and the Board’s Report. Considering the Compliance Certificate to ensure compliance with the provisions of all the laws applicable to the company. Appointment of Cost Auditors, Secretarial Auditors and Internal Auditors. Approval of Remuneration of Cost Auditor subject to approval of Members.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Specific Items Borrowing money otherwise than by issue of debentures. Investing the funds of the company. Granting loans or giving guarantee or providing security in respect of loans. Making political contributions. Making calls on shareholders in respect of money unpaid on their shares.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Approving Remuneration of Managing Director, Whole-time Director and Manager. Appointment or Removal of Key Managerial Personnel Appointment of a person as a Managing Director / Manager in more than one company. According sanction for related party transactions which are not in the ordinary course of business or which are not on arm’s length basis.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Purchase and Sale of subsidiaries/assets which are not in the normal course of business. Approve Payment to Director for loss of office. Items arising out of separate meeting of the Independent Directors if so decided by the Independent Directors.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Corporate Action Authorise Buy Back of securities Issue of securities, including debentures, whether in or outside India. Approving amalgamation, merger or reconstruction. Diversify the business. Takeover another company or acquiring controlling or substantial stake in another company

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Additional list of items in case of listed companies Approving Annual operating plans and budgets Capital budgets and any updates Information on remuneration of KMP. Show cause, demand, prosecution notices and penalty notices which are materially important. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Additional list of items in case of listed companies Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company. Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Additional list of items in case of listed companies Details of any joint venture or collaboration agreement. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property. Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement,implementation of Voluntary Retirement Scheme etc.

LIST OF ITEMS WHICH NEEDS TO BE CONSIDERED AT BOARD MEETING; Additional list of items in case of listed companies Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material. Non-compliance of any regulatory, statutory or listing requirements and shareholder services such as non-payment of dividend, delay in share transfer etc.

BOARD FUNCTIONS IN RESPECT TO COST AUDIT The Companies cover under Cost Audit needs to appoint Cost Auditor within 180 days of the commencement of every financial year. The cost auditor needs to be appointed in the Board Meeting. The Cost Auditor needs to be intimated about this appointment.

BOARD FUNCTIONS IN RESPECT TO COST AUDIT The Central Government should also be intimated within 30 days or 180 days from the closure of financial year, which ever is earlier. Board of Directors shall consider and examine the cost audit report particularly any reservation or qualification contained therein. The same shall responded to Central Government within 30 days.

BOARD FUNCTIONS IN RESPECT TO FRAUD REPORTED BY THE AUDITORS: if the fraud which involves or is expected to involve individually an amount of Rs.1 cr or above, the same needs to be reported by Auditor to Central Government. The Auditor shall report the matter to Board/Audit Committee immediately but not later than 2 days The reply should be sought within 45 days. Auditor needs to report the same to Central Government within 15 days from the receipt of reply.  

BOARD FUNCTIONS IN RESPECT TO FRAUD REPORTED BY THE AUDITORS: The report shall be sent to Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with AD or by speed post followed by e-mail confirmation of the same. The report shall be in the letter head of the auditor containing postal address, e-mail and contact and telephone number and be signed by the auditor with his seal and shall indicate his Membership No. The Report shall be in the form of ADT-4.

FRAUD LESS THAN RS.1 CR: The auditor shall report the same to Board/Audit Committee immediately but not later than 2 days. The auditor report to the Board shall specify the following; a. Nature of Fraud with description; b. Approximate amount involved; and c. Parties involved. Incase of fraud is less than Rs.1cr as reported by auditor, then, the following shall be disclosed in the Board Report. Nature of Fraud with description; Approximate amount involved; Parties involved, if remedial action not taken; and. Remedial action taken;  

RELATED PARTY TRANSACTION   Identification of Related Parties (has wide coverage for listed Company). Identification of Relevant transactions. Approval Process Incase of listed company all material transaction requires shareholders’ approval. Incase of listed Company all related parties are not entitled to vote on such item. All Related Party transaction shall be disclosed in Board Report with Justification.

GENERAL MEETING Types of General Meeting: Annual General Meeting (in each Calendar Year); 2. Extra – Ordinary General Meeting Every company shall, in each Calendar Year, hold a General Meeting called the Annual General Meeting.   Items of business other than Ordinary Business may be considered at an Extra-Ordinary General Meeting or by means of a postal ballot, if thought fit by the Board.

NOTICE Notice in writing shall be given to following personnel’s; Members Directors Auditors (including Cost Auditor) Debenture Trustee

NOTICE Notice shall clearly specify the nature of the Meeting and the business to be transacted thereat. Notice shall state the nature of the concern or interest (financial or otherwise), if any, of the following persons relation to any item in the explanatory statement.   a. Directors and Manager, b. Other Key Managerial Personnel; and c. Relatives of the persons mentioned above.

QUORUM NO OF MEMBERS QUORUM Not More than 1000 5 More than 1000 upto 5000 15 More than 5000 30 Private Company 2

AUDITORS The Auditors, unless exempted by the Company shall attend the General Meeting. He can authorize his representative also to attend the meeting. The authorized representative shall also be qualified to be an auditor. Shall have right to heard at the Meeting. The Cost auditor remuneration approved by the Board needs to be ratified by shareholders in their meeting.

RELATED PARTY Related Party which are not in the ordinary course of business needs approval of Members. A Member who is a related party is not entitled to vote on such resolution. Ordinary Resolution(both listed and unlisted). Incase of listed Company all other related parties are also not entitled to vote.

POSTAL BALLOT Every Company having more than 200 hundred members needs to transact some of the business only through Postal Ballot . The Board may opt for transacting other special business. Any business where auditors or Directors have right to be heard cannot be transacted through postal ballot. Ordinary Business shall not be transacted by means of a postal ballot.

FOLLOWING ITEMS OF BUSINESS WHICH SHALL BE PASSED ONLY BY POSTAL BALLOT Alteration of the objects clause of the memorandum Alteration of articles of association in relation to insertion or removal of provisions which are required to be included in the articles of a company in order to constitute it a private company Change in place of registered office outside the local limits of any city, town or village. Change in objects for which a company has raised money from public through prospectus and still has any unutilized amount out of the money so raised Issue of shares with differential rights as to voting or dividend or otherwise

FOLLOWING ITEMS OF BUSINESS WHICH SHALL BE PASSED ONLY BY POSTAL BALLOT Variation in the rights attached to a class of shares or debentures or other securities, Buy-back of shares by a company, Appointment of a Director elected by small shareholders, Sale of the whole or substantially the whole of an undertaking of a company or where the company owns more than one undertaking, of whole or substantially the whole of any of such undertakings, Giving loans or extending guarantee or providing security in excess of the limit specified, Any other Resolution prescribed under any applicable law, rules or regulations.

THANK YOU palaniappannachiappan@gmail.com