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

Orchid Pharma Ltd is a listed public company planning to acquire an undertaking, and the Board wants an independent assessment of the undertaking's value before pricing the deal. Which Audit Committee term of reference in Section 177(4) directly covers this?

The relevant term is valuation of undertakings or assets of the company, wherever it is necessary, which Section 177(4)(vi) includes in the Audit Committee's terms of reference. Other items cover loans, end use of funds and internal controls, not valuation.

  1. AScrutiny of inter-corporate loans and investments
  2. BValuation of undertakings or assets of the company, wherever it is necessaryCorrect
  3. CMonitoring the end use of funds raised through public offers
  4. DEvaluation of internal financial controls and risk management systems

Explanation

Section 177(4)(vi) lists valuation of undertakings or assets of the company, wherever necessary, as an Audit Committee term of reference. The others concern loans and investments, use of public offer funds, and internal controls, none of which address valuation.

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