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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Effectiveness and Building Better Boards

At a meeting of Narmada Steels Ltd's Audit Committee considering the auditors' report, the statutory auditor and the CFO attend. The CFO, a key managerial personnel, wants to vote on approving the report. What is the position under section 177 of the Companies Act, 2013?

Neither may vote. Section 177(7) gives the auditors and key managerial personnel a right to be heard at Audit Committee meetings when the auditors report is considered, but expressly denies them the right to vote, so the CFO cannot vote.

  1. ABoth the auditor and the CFO may vote
  2. BOnly the auditor may vote
  3. CThe CFO may vote but the auditor may not
  4. DBoth have a right to be heard but no right to voteCorrect

Explanation

Section 177(7) gives auditors and key managerial personnel a right to be heard when the committee considers the auditors report, but not a right to vote. Voting stays with committee members, preserving the independent majority's role.

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