Companies Act 2014 section 1551

Audit committees for public-interest entities

Section 1551 requires the directors of each public-interest entity to establish an audit committee, and sets out rules on its composition, the independence of its members, exemptions for certain types of entity, and the committee's core responsibilities.

• The majority of audit committee members must be independent non-executive directors, with at least one having competence in accounting or auditing, and the committee as a whole must have sectoral competence.
• Independence means the director has not had a material business relationship with, or been employed by, the entity at any time in the preceding three years.
• Certain entities are exempt from the requirement, including subsidiaries where group-level arrangements are in place, UCITS, alternative investment funds, issuers of asset-backed securities (subject to disclosure), certain small credit institutions, and qualifying captive insurance or reinsurance undertakings.
• The audit committee's responsibilities include monitoring financial reporting, overseeing the statutory audit, reviewing auditor independence, and managing the auditor selection and appointment process.