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Appointment of First Auditor

This query is : Resolved 

09 October 2007 Urgent

According to Sec.224(5) of the Companies Act, when the BOD fails to appoint the first auditor within the time stipulated therein, the power to appoint auditor vests with the shareholders and they can exercise their right in a General Meeting.

Now my question:

Whether shareholders appoint the first auditor in the 1st AGM of the company? Provide reasons for the same.


09 October 2007 No, in such case 1st Auditors shall be appointed in the EGM of the Company. Clause 5 of Section 224 says the 1st Auditors hold office until the conclusion of first annual general meeting. Therefore intention is appointment in EGM not the AGM.

09 October 2007 The directors also will be held for their defaults for not appointing an auditor of the company.




10 October 2007 According to you view, the Shareholders of the Company shall appoint the first auditor in EGM only. My view is also the same. But some people around me are arguing that according to the provisions of the companies act the auditor is required to authenticate all the financial statements put before them in an AGM and therefore even if the shareholders fails to appoint the auditor in EGM, it can be done in 1st AGM and the financial statements may be authenticated in the next AGM

10 October 2007 According to you view, the Shareholders of the Company shall appoint the first auditor in EGM only. My view is also the same. But some people around me are arguing that according to the provisions of the companies act the auditor is required to authenticate all the financial statements put before them in an AGM and therefore even if the shareholders fails to appoint the auditor in EGM, it can be done in 1st AGM and the financial statements may be authenticated in the next AGM

10 October 2007 "If the board of directors fail to appoint 1st auditor the power moves to company i.e the company in its GM may appoint its 1st auditor"

its no where mentioned that this power can be exercised in AGM...

if we think logically then its well understood that this power is to be exercised in EGM since the tenure of first auditor is upto the conclusion of 1st AGM...

10 October 2007 Are you Showing appointment of first auditor and re-appointment of autditor in the same AGM, since 1st auditor will hold office until the conclusion of first AGM.

15 October 2007 It is a right given to the shareholders to appoint the first auditors if the directors fails to appoint auditors with in 1 month from the date of registration of the Company. In such a case they have to convene the EGM and appoint the auditors. Even if no auditors were appointed till the AGM, ordinary business such as adoption of accounts and declaration dividend etc. cannot be taken for considferation. So the AGM will not be treated as AGM and it can be treated as the general meeting convened, only appointment of auditors.




16 October 2007 It is a right given to the shareholders to appoint the first auditors if the directors fails to appoint auditors with in 1 month from the date of registration of the Company. In such a case they have to convene the EGM and appoint the auditors. Even if no auditors were appointed till the AGM, ordinary business such as adoption of accounts and declaration dividend etc. cannot be taken for considferation. So the AGM will not be treated as AGM and it can be treated as the general meeting convened, only appointment of auditors.

17 October 2007 Other than AGM means it should be EGM. Otherwise it will be difficult to minute it (whether under EGM or AGM)

14 November 2007 Thanks.



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