Audit Committee Resolution Template for South Africa

What is a Audit Committee Resolution?

The Audit Committee Resolution is a crucial corporate governance document used in South African companies to formally record decisions made by the audit committee. It is required whenever the audit committee meets to make significant decisions regarding financial oversight, auditor appointments, risk management, or other matters within its purview. The document must comply with Section 94 of the Companies Act 71 of 2008 and align with King IV Report recommendations. The resolution is particularly important for demonstrating compliance with regulatory requirements, documenting the committee's discharge of its fiduciary duties, and maintaining a clear record of corporate governance practices. It's used by public companies, state-owned entities, and private companies that have voluntarily established audit committees.

About the Audit Committee Resolution

An Audit Committee Resolution is a formal document that records decisions made by your company's audit committee during meetings. This critical corporate governance tool ensures compliance with South African law while documenting your committee's oversight responsibilities and decision-making processes.

When do you need this document?

You need an Audit Committee Resolution whenever your audit committee meets to make significant decisions. This includes appointing or removing external auditors, approving audit plans and fees, reviewing financial statements, addressing internal control weaknesses, or making recommendations on risk management policies. Listed companies on the JSE must use resolutions to document mandatory committee functions, while public entities under the PFMA require formal resolutions for financial oversight decisions. Private companies with voluntary audit committees also benefit from proper resolution documentation to maintain governance standards and protect directors from liability.

Key legal considerations

Your Audit Committee Resolution must clearly identify all attendees and confirm quorum requirements were met according to your company's MOI or the Companies Act. The resolution should include detailed records of any declarations of interest, ensuring transparency and avoiding conflicts. Key clauses must specify the exact decisions made, voting outcomes, and any dissenting opinions. You must ensure proper notice was given for the meeting and that all committee members had adequate time to review relevant materials. The resolution should reference specific sections of financial statements, audit reports, or risk assessments being addressed. Documentation of the committee's reasoning for decisions, particularly regarding auditor appointments or internal control recommendations, provides crucial legal protection and demonstrates due diligence.

Legal requirements in South Africa

Under Section 94 of the Companies Act 71 of 2008, your audit committee must consist of at least three independent non-executive directors with appropriate financial literacy and experience. The resolution must document that these composition requirements were met at the time of decision-making. King IV Report principles require your resolution to demonstrate how the committee discharged its duties regarding integrated reporting, combined assurance, and stakeholder value creation. For JSE-listed companies, resolutions must show compliance with Listing Requirements regarding auditor independence, non-audit services approval, and financial statement oversight. Public entities must ensure resolutions align with PFMA requirements for financial management and oversight. Your resolution should reference the specific legislative or regulatory provision being addressed and demonstrate how the committee's decision supports compliance with applicable governance frameworks.