Any person certified as a Chartered Accountant (CA) under the Chartered Accountant Act, 1949, who has received training in reviewing and verifying accounting data, is considered to be an auditor. According to the 2013 Companies Act’s rules, every firm must appoint an auditor.
The goal of Auditor’s Appointment
The company’s auditors are there to safeguard the interests of the shareholders. The auditor is required by law to review the directors’ accounts and notify them of the company’s actual financial situation. In order to safeguard and maintain the firm in sound financial shape, the auditor provides his impartial assessment to the owners or shareholders of the company.
Appointment of an auditor for various types of businesses
Particulars |
Non-Government Company |
Listed/Specified Company |
|---|---|---|
| Application for 1st Auditor post Incorporation | Appointed by the Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of information. | Appointed by Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of the 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 till the end of the 6th Annual General Meeting (AGM). The appointment shall be in accordance with the conditions laid down by the auditor. | Appointed by Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of the information. |
| Appointment of Subsequent Auditor | The appointment is done by the members and he will hold office till the conclusion of the 6th meeting. | The appointment is done by the members for a Maximum term of 5/10 consecutive years. |
| Casual Vacancy due to resignation and other reasons | The appointment is by the members within 3 months of the recommendations of Board and he will hold office till the next AGM. | The appointment is by the members within 3 months of the recommendations of Board and he will hold office till the next AGM. |
Applicable Act
This is to further explain that Section 139(6) of the Companies Act, 2013 which lays down that the first Auditor of a company, other than a Government company, shall be appointed by the Board of Directors within 30 days from the date of registration of the company and in the case of failure of the Board to appoint such Auditor, it shall inform the members of the company, who shall within 90 days at an extraordinary general meeting appoint such auditor and such Auditor shall hold office till the conclusion of the first annual general meeting.
Reference: MCA
A Special Notice Appoints An Auditor Other Than A Retiring Auditor
A special notice under Section 115 of the 2013 Companies Act must be given proposing that such a resolution would be moved at the following annual general meeting when it is proposed that someone other than the retiring auditor shall be appointed as an auditor or when it is proposed that the retiring auditor shall not be re-appointed.
Such a particular notice can be avoided if the retiring auditor has served for a continuous period of five or 10 years, as appropriate. Based on an application from the firm or another aggrieved party, if the Tribunal determines that the auditor is abusing his or her rights, then the copy of the representation need not be delivered, and it is not required to be read aloud during the meeting.
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Any person certified as a Chartered Accountant (CA) under the Chartered Accountant Act, 1949, who has received training in reviewing and verifying accounting data, is considered to be an auditor. According to the 2013 Companies Act’s rules, every firm must appoint an auditor.
The goal of Auditor’s Appointment
The company’s auditors are there to safeguard the interests of the shareholders. The auditor is required by law to review the directors’ accounts and notify them of the company’s actual financial situation. In order to safeguard and maintain the firm in sound financial shape, the auditor provides his impartial assessment to the owners or shareholders of the company.
Appointment of an auditor for various types of businesses
Particulars |
Non-Government Company |
Listed/Specified Company |
|---|---|---|
| Application for 1st Auditor post Incorporation | Appointed by the Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of information. | Appointed by Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of the 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 till the end of the 6th Annual General Meeting (AGM). The appointment shall be in accordance with the conditions laid down by the auditor. | Appointed by Board Of Directors. This has to be done within 30 days from the date of Registration. Appointment can also be done by Members at Extraordinary General Meeting within 90 days of the information. |
| Appointment of Subsequent Auditor | The appointment is done by the members and he will hold office till the conclusion of the 6th meeting. | The appointment is done by the members for a Maximum term of 5/10 consecutive years. |
| Casual Vacancy due to resignation and other reasons | The appointment is by the members within 3 months of the recommendations of Board and he will hold office till the next AGM. | The appointment is by the members within 3 months of the recommendations of Board and he will hold office till the next AGM. |
Applicable Act
This is to further explain that Section 139(6) of the Companies Act, 2013 which lays down that the first Auditor of a company, other than a Government company, shall be appointed by the Board of Directors within 30 days from the date of registration of the company and in the case of failure of the Board to appoint such Auditor, it shall inform the members of the company, who shall within 90 days at an extraordinary general meeting appoint such auditor and such Auditor shall hold office till the conclusion of the first annual general meeting.
Reference: MCA
A Special Notice Appoints An Auditor Other Than A Retiring Auditor
A special notice under Section 115 of the 2013 Companies Act must be given proposing that such a resolution would be moved at the following annual general meeting when it is proposed that someone other than the retiring auditor shall be appointed as an auditor or when it is proposed that the retiring auditor shall not be re-appointed.
Such a particular notice can be avoided if the retiring auditor has served for a continuous period of five or 10 years, as appropriate. Based on an application from the firm or another aggrieved party, if the Tribunal determines that the auditor is abusing his or her rights, then the copy of the representation need not be delivered, and it is not required to be read aloud during the meeting.
