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Appointment of auditor

18 September 2013

Dear Sir,

I have two queries regarding appointment of statutory auditor of pvt. ltd. companies:

(1) The company was incorporated in Feb 12 but did not appoint any auditors yet. Can auditors be appointed now in Sept 13 by calling a EGM to audit accounts of FY 11-12 & 12-13 ?

(2) Statutory auditor of a company resigned in Dec 12 but no new auditor was appointed. Now company want to appoint new auditor. Can an auditor be appointed now by calling a EGM now?

Thanks in anticipation

regards.

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3 Replies

Ajay Mishra (Company Secretary) (74337 Points)
Replied 20 September 2013

Appointment of First Auditors

As per section 224(5), the first auditor or auditors of a company shall be appointed by the Board of directors within one month of the date of registration of the company; and the auditor or auditors so appointed shall hold office until the conclusion of the first annual general meeting. Following provisions are related to the matter: (Specimen of resolution of the Board has been given in Appendix 1)

(i) Appointment of first auditors in general meeting.—A company in general meeting may appoint the first auditor or auditors if the Board of directors fails to exercise its power of appointment of first auditors within one month of the date of incorporation of the company.

(ii) Appointment of first auditors through Memorandum and Articles of Association.—The Institute of Chartered Accountants of India has expressed its opinion vide Compendium of Opinion Volume No. 1 that the appointment of first auditors through the Memorandum and Articles of Association of the newly floated private company is not a valid appointment.

(iii) Removal of first auditors.—The company may, at a general meeting, remove first auditor(s) or all or any of such auditors and appoint in his or their places any other person or persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than fourteen days before the date of the meeting.

(iv) Tenure of office of the first auditor.—The first auditor(s) shall hold office until the conclusion of the first annual general meeting of the company and then be eligible for re-appointment.