Appointment of Auditor

Appointment of Auditor

Introduction:

Any individual trained to review and verify accounting data and recognized as a Chartered Accountant (CA) under the Chartered Accountant Act, 1949, is deemed to be an auditor. Every company needs to appoint an auditor as per the provisions of the Companies Act, 2013.

Purpose for Appointment of Auditor

The purpose of auditors in the company is to protect the interests of the shareholders. The auditor is obligated by law to examine the accounts maintained by the directors and inform them of the true financial position of the company. The auditor gives his independent opinion to the owners or shareholders of the company to protect and keep the company in a safe financial condition.

Appointment of an Auditor for Different Types of Companies

Non-Government Company

Listed/Specified Company

Government Company

Application for the 1st Auditor post Incorporation

Appointed by the Board Of Directors. This has to be done within 30 days from the date of registration. The appointment can also be done by members at an Extraordinary General Meeting within 90 days of information.

Appointed by the Board Of Directors. This has to be done within 30 days from the date of registration. The appointment can also be done by members at an Extraordinary General Meeting within 90 days of the information.

Appointed by the Comptroller and Auditor General of India. This has to be done within 60 days from the date of registration. The appointment can also be done by the Board Of Directors within 30 days of incorporation. Members can also appoint at an Extraordinary General Meeting within 60 days of information.

Auditor at First AGM with the written consent and a certificate of Auditor.

The appointment is done by the members. He will hold office until the end of the 6th Annual General Meeting (AGM). The appointment shall be in accordance with the conditions laid down by the auditor.

The appointment is done by the members for a maximum term of 5/10 consecutive years. A cooling off period of 5 years before the next appointment will be required.

The appointment is done by the Comptroller and Auditor General of India. He should be appointed within 180 days from the 1st of April.

Appointment of Subsequent Auditor

The appointment is done by the members, and he will hold office until the conclusion of the 6th meeting.

The appointment is done by the members for a maximum term of 5/10 consecutive years.

The appointment is done by the Comptroller and Auditor General of India within 180 days from the 1st of April.

Casual Vacancy due to resignation and other reasons

The appointment is by the members within 3 months of the recommendations of the Board, and he will hold office until the next AGM.

The appointment is by the members within 3 months of the recommendations of the Board, and he will hold office until the next AGM.

The appointment is done by the Comptroller and Auditor General within 30 days.

Appointment Of Auditor Other Than Retiring Auditor By A Special Notice

When a person other than the retiring auditor is proposed to be appointed as an auditor, or when it is proposed that the retiring auditor shall not be re-appointed, a special notice under Section 115 of the Companies Act, 2013, has to be given proposing that such a resolution would be moved at the next annual general meeting.

If the retiring auditor has completed a consecutive tenure of five years or, as the case may be, ten years, then such special notice can be avoided. For the purpose of special notice, the relevant points are as follows:

If the auditor makes a representation in writing to the company and requests notification to the members, the company shall:

  • State the fact of representation in any notice regarding the resolution.

  • Send a copy of the representation to those members by the company to whom the notice of the meeting is sent, whether before or after the receipt of the representation.

  • If the copy of the representation is not sent, a copy thereof should be filed with the Registrar.

  • On receipt of the special notice for removing the auditor, the company should send a copy of the same to the retiring auditor.

  • Such representation should be of a reasonable length and not too long.

  • The special notice should not be received by the company too late for the purpose of circulation to members.

  • The auditor may require the company to read out the representation in the meeting if it is not notified to members because it was too late or because of the company’s default.

If the Tribunal is satisfied that the rights are being abused by the auditor based on an application either of the company or of any other aggrieved person, then:

A copy of the representation may not be sent, and

The representation need not be read out at the meeting.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

Introduction:

Any individual trained to review and verify accounting data and recognized as a Chartered Accountant (CA) under the Chartered Accountant Act, 1949, is deemed to be an auditor. Every company needs to appoint an auditor as per the provisions of the Companies Act, 2013.

Purpose for Appointment of Auditor

The purpose of auditors in the company is to protect the interests of the shareholders. The auditor is obligated by law to examine the accounts maintained by the directors and inform them of the true financial position of the company. The auditor gives his independent opinion to the owners or shareholders of the company to protect and keep the company in a safe financial condition.

Appointment of an Auditor for Different Types of Companies

Non-Government Company

Listed/Specified Company

Government Company

Application for the 1st Auditor post Incorporation

Appointed by the Board Of Directors. This has to be done within 30 days from the date of registration. The appointment can also be done by members at an Extraordinary General Meeting within 90 days of information.

Appointed by the Board Of Directors. This has to be done within 30 days from the date of registration. The appointment can also be done by members at an Extraordinary General Meeting within 90 days of the information.

Appointed by the Comptroller and Auditor General of India. This has to be done within 60 days from the date of registration. The appointment can also be done by the Board Of Directors within 30 days of incorporation. Members can also appoint at an Extraordinary General Meeting within 60 days of information.

Auditor at First AGM with the written consent and a certificate of Auditor.

The appointment is done by the members. He will hold office until the end of the 6th Annual General Meeting (AGM). The appointment shall be in accordance with the conditions laid down by the auditor.

The appointment is done by the members for a maximum term of 5/10 consecutive years. A cooling off period of 5 years before the next appointment will be required.

The appointment is done by the Comptroller and Auditor General of India. He should be appointed within 180 days from the 1st of April.

Appointment of Subsequent Auditor

The appointment is done by the members, and he will hold office until the conclusion of the 6th meeting.

The appointment is done by the members for a maximum term of 5/10 consecutive years.

The appointment is done by the Comptroller and Auditor General of India within 180 days from the 1st of April.

Casual Vacancy due to resignation and other reasons

The appointment is by the members within 3 months of the recommendations of the Board, and he will hold office until the next AGM.

The appointment is by the members within 3 months of the recommendations of the Board, and he will hold office until the next AGM.

The appointment is done by the Comptroller and Auditor General within 30 days.

Appointment Of Auditor Other Than Retiring Auditor By A Special Notice

When a person other than the retiring auditor is proposed to be appointed as an auditor, or when it is proposed that the retiring auditor shall not be re-appointed, a special notice under Section 115 of the Companies Act, 2013, has to be given proposing that such a resolution would be moved at the next annual general meeting.

If the retiring auditor has completed a consecutive tenure of five years or, as the case may be, ten years, then such special notice can be avoided. For the purpose of special notice, the relevant points are as follows:

If the auditor makes a representation in writing to the company and requests notification to the members, the company shall:

  • State the fact of representation in any notice regarding the resolution.

  • Send a copy of the representation to those members by the company to whom the notice of the meeting is sent, whether before or after the receipt of the representation.

  • If the copy of the representation is not sent, a copy thereof should be filed with the Registrar.

  • On receipt of the special notice for removing the auditor, the company should send a copy of the same to the retiring auditor.

  • Such representation should be of a reasonable length and not too long.

  • The special notice should not be received by the company too late for the purpose of circulation to members.

  • The auditor may require the company to read out the representation in the meeting if it is not notified to members because it was too late or because of the company’s default.

If the Tribunal is satisfied that the rights are being abused by the auditor based on an application either of the company or of any other aggrieved person, then:

A copy of the representation may not be sent, and

The representation need not be read out at the meeting.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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