Appointment of auditors in case of pvt ltd co

This query is : Resolved 

Querist : Anonymous (Querist) 10 June 2012


In case of a private limited company, appointment of first auditor needs to be done through a board resolution within one month of of the date of registration of a company.

However, if the appointment of auditors is not done within 30 days of registration of pvt ltd company, then what does the law states for appointment of auditors subsequently?


Ajay Mishra (Expert)
11 June 2012


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:

(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.

The said provision will apply on both public as well as private limited company.


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