Audit Committee Resolution Template for Canada

An Audit Committee Resolution is a formal board document that establishes, modifies, or documents decisions regarding your company's audit committee. This resolution serves as official evidence of compliance with Canadian corporate governance requirements and securities regulations, ensuring your organization meets the strict oversight standards mandated by law.

When do you need this document?

You need an Audit Committee Resolution when incorporating a new company that will become a reporting issuer, when existing companies become subject to securities regulations, or when making changes to your current audit committee structure. Public companies listed on Canadian exchanges must establish audit committees with specific independence and expertise requirements. You'll also need this resolution when appointing new independent directors to the committee, updating committee responsibilities following regulatory changes, or demonstrating compliance during regulatory reviews or audits.

Key legal considerations

The resolution must address critical governance elements including committee composition with the required number of independent directors, financial literacy requirements for all members, and the designation of at least one financial expert. You must clearly define the committee's authority and responsibilities, including oversight of external auditors, review of financial statements, and evaluation of internal controls. The document should reference your company's bylaws and establish procedures for committee meetings, reporting to the full board, and annual performance evaluations. Consider including provisions for committee access to management, external advisors, and company records to ensure effective oversight.

Legal requirements in Canada

Under the Canada Business Corporations Act (CBCA), federally incorporated companies subject to securities regulations must establish audit committees composed entirely of independent directors. National Instrument 52-110 mandates specific requirements including financial literacy for all committee members and at least one member with accounting or financial expertise. The committee must have a written charter outlining its responsibilities, including oversight of external auditor selection and compensation, review of financial statements and disclosure documents, and evaluation of internal control systems. Provincial securities commissions enforce additional requirements, and companies listed on the Toronto Stock Exchange must comply with TSX governance standards. The resolution must demonstrate compliance with Canadian Auditing Standards (CAS) oversight requirements and establish procedures for handling complaints about accounting or auditing matters through appropriate whistleblower mechanisms.