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CS Professional · Corporate Restructuring, Valuation and Insolvency · Process of M&A Transactions

Before a merger, the Audit Committee of Narmada Steels Ltd, a listed public company, wants outside expert advice on valuation and wants to see the target-related records. Under Section 177 of the Companies Act, 2013, what is its position?

The committee may obtain professional advice from external sources and has full access to information in the company's records. Section 177(6) gives it this authority for matters within its terms of reference or referred by the Board, without any need for Tribunal permission.

  1. AIt needs prior Tribunal permission to consult external professionals
  2. BIt may obtain professional advice from external sources and has full access to information in the company's recordsCorrect
  3. CIt may seek external advice but has no access to company records
  4. DIt can act only through the statutory auditors, who must obtain the advice

Explanation

Section 177(6) gives the Audit Committee authority to investigate matters in its terms of reference or referred by the Board, to obtain professional advice from external sources and to have full access to information contained in the company's records. No Tribunal permission is required.

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