Section 177 of the Companies Act, 2013 Audit Committee

In force Explainer reviewed 23 October 2026

Section 177 requires every listed public company, and prescribed classes of companies, to have an Audit Committee of at least three directors with a majority of independent directors. The committee oversees auditors, financial statements, related party transactions, inter-corporate loans and internal controls. Prescribed companies must also run a vigil (whistle-blower) mechanism.

Who it applies to

Listed public companies
Prescribed public companies (rule 6 of the Meetings of Board Rules)
Companies that must establish a vigil mechanism

What the section says

An Audit Committee is required for every listed public company and prescribed classes (s.177(1)). Under rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014, these are public companies with paid-up capital of ₹10 crore or more, turnover of ₹100 crore or more, or aggregate loans, borrowings, debentures or deposits above ₹50 crore.
Minimum three directors, independent directors in majority, and a majority including the chairperson able to read and understand financial statements (s.177(2)).
Terms of reference include: recommending auditor appointment and pay; reviewing auditor independence; examining financial statements; approving related party transactions (omnibus approval allowed); scrutinising inter-corporate loans and investments; valuations; internal financial controls and risk management; and end use of public-offer funds (s.177(4)).
A transaction up to ₹1 crore entered into without Audit Committee approval and not ratified within three months is voidable at the committee's option (proviso to s.177(4)(iv)).
The committee can investigate matters within its remit, take outside professional advice and access company records. Auditors and KMP have a right to be heard but no vote (s.177(5)-(7)).
Listed and prescribed companies must establish a vigil mechanism with safeguards against victimisation and direct access to the committee chairperson (s.177(9)-(10)). Under rule 7, this includes companies that accept public deposits or have borrowed more than ₹50 crore from banks and public financial institutions.

Related sections

Sections this one refers to:

Sections that refer to this one:

139Appointment of auditors 143Powers and duties of auditors and...178Nomination and Remuneration Commit...

Common questions

Is an audit committee required for a private company?

No. Section 177 and rule 6 apply to listed public companies and to public companies above the prescribed thresholds.

Who must have a vigil mechanism?

Listed companies, companies accepting deposits from the public, and companies that have borrowed more than ₹50 crore from banks and public financial institutions, under rule 7 of the Meetings of Board Rules.

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Section number, heading and status: Companies Act, 2013 as consolidated on India Code (amendments to about 2020–21). Sources for this page: Companies Act, 2013: India Code consolidated text. Reviewed 23 October 2026. General information, not legal advice; confirm on the official sources before relying on a provision.