In many countries, members of the audit committees are elected from non-executive members of the BOD. It would certainly enhance the independence of the audit committee if the members are elected directly from the shareholders?
Hi,
I don't know if they can be elected directly from shareholders, as they must be members of the boatd before. But I do think that they may be nominated at the board to become afterwards member of the audit committee.
You can look at the Vafeas (2005) paper in contemporarey accounting research for some more details "Audit committees, boards and the quality of reported earnings"
Greetings
Yes it is possible for members of Audit committees to be elected directly by shareholders in annual general meetings. This is in fact the practice in my dear country Nigeria. However, whether the best are ever elected is another matter.
I wonder in those countries where the members of the audit committee are elected directly from the AGM would they have the same requirements for members of the BOD in terms of ownership as well as expertise either one of them
Hi. You have to look at the rule in your country. In many countries, the rules pertaining the membership of the audit committee are provided not under the law but the listing rules of the stock exchange. The committee is a board committee, comprising of a combination of independent and executive directors. So yes, one need to be a director.
Nigeria has a unique audit committee arrangement. The law provides for equal representation of shareholders and the Board of directors in an audit committee. It is the shareholders representatives that are elected at the annual general meeting and may not necessarily have the same antecedents with their members of Board counterparts
It seems that we are missing my question. For a person to be elected as a member of the audit committee he should be a member of the BOD and sometimes he is an expert in his field and may not be necessary a member of the BOD. In countries where members of the audit committees are directly elected from shareholders in AGM, can shareholders elect or select an outside expert to be member of the board and not necessarily a shareholder?
Shareholders can elect an outside expert to be a member of the board who is not a shareholder in USA.
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