XY Ltd. is a (Unlisted) wholly owned subsidiary of ABC Ltd. (Listed). XY Ltd. annual turnover was ₹120 crore as per the last audited balance sheet. The auditor of XY Ltd. is of the opinion that, XY Ltd. is covered under

According to Rule 6 of the Companies (Meetings of Board and Its Powers) Rules, 2014, the Board of directors of every listed public company and a company covered under Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an Audit Committee of the Board. Class of companies defined in Rule 4(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014:- all public companies with a paid up capital of ten crore rupees or more; or all public companies having turnover of one hundred crore rupees or more; or all public companies, having in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees. Further, Rule 4(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014 provides that the following classes of unlisted public companies shall not be covered under above rule, namely:- a Joint venture a wholly owned subsidiary and a dormant company. Hence it is clear that the wholly owned subsidiary company XY Ltd is not covered under Rule 4 and so need not constitute Audit Committee of the Board.