As on 31.03.2021, the composition of Board of Management of Happy Hotels Ltd., an unlisted Public company comprising of 8 members is as under: SN Name Designation 1 A Executive Chairman and Managing Director 2 B Executiv

As per section 177 of the Companies Act, 2013, the Audit Committee shall consist of a minimum of three directors with independent directors forming a majority. So complying with the provisions of the Companies Act, 2013, the committee should be re-constituted. So, in view of the above, the existing audit committee is not in order as per the requirement of law as it does not have majority of the members as independent directors. Audit Committee as per Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: Every listed entity shall constitute a qualified and independent audit committee in accordance with the terms of reference, subject to the following: The audit committee shall have minimum three directors as members. Two-thirds of the members of audit committee shall be independent directors and in case of a listed entity having outstanding SR equity shares, the audit committee shall only comprise of independent directors. All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise. The chairperson of the audit committee shall be an independent director and he /she shall be present at Annual general meeting to answer shareholder queries. The Company Secretary shall act as the secretary to the audit committee. As per the facts given in the question, the Company is planning to list its shares on a recognised stock exchange in the month of July, 2021. In order to comply with the Requirements of SEBI (LODR) Regulations, 2015, the company requires to re-constitute the Audit Committee which shall have: Chairman of Audit Committee - Independent Member - Non-Independent Director Member - Independent Director Hence, once the company gets listed at least 2 (3 x 2/3) directors shall be independent directors and the chairman of the audit committee shall be an independent director so company is required to change the composition of audit committee once the company gets listed on stock exchange. In view of the above, the existing audit committee cannot continue either under section 177 or after listing of its securities.