Appointment of Auditor u/s 224

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Anuraag Sharma (Querist)
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29 March 2009 Case : X Ltd. was incorporated on 01-02-1998 and Mr. P was appointed as auditor by the Board of Directors in their meeting held on 03-03-1998.

According to sec. 224, the board of directors shall appoint the first auditor of a company within one month of the date of registration of the company by a valid resolution. Further, if the board fails to do so shareholders shall appoint first auditor in the general meeting.

In the present case the date of incorporation is 01-02-1998 and the directors have appointed Mr. P as the first auditor on 03-02-1998 i.e. to say after one month.

Query : was this appointment valid or it should be deemed as void so that it could give rise to the powers of Central Government conferred upon it by sec. 224(3)

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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01 April 2009
The appointment is valid but you have to make ready the following papers.

Issue a formal letter to the auditor that whether he is willing to take up audit assignment. This letter should be dated 18-2-1998 and get the confirmation letter from him on or before 25-2-1998.

Issue a formal letter on 28-2-1998 inviting him to the Board meeting on 3-3-1998.

Just get acknowledgememts for the same and keep it in file. If roc raises question for 2days by showing the above documents you can get condonation for the procedural delay by 2 days.

Anuraag Sharma

Anuraag Sharma (Querist)
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01 April 2009 thanks sir....:)

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