In case of Pvt. Ltd. company, the statutory auditor's term has already expired in the AGM of 2022 and we have not appointed the new auditor. We were ready to replace him with another auditor through EGM. But now the earlier auditor is ready to continue the company with 1 year appointment (every year). My query is: 1. can the earlier auditor appointed? 2. Can he be appointed with EGM or how ? 3. Can he be appointed every year as it is his request or is it mandatory to appoint him for 5 years?
06 July 2024
In the case of your Private Limited Company regarding the appointment of the statutory auditor, here are the answers to your queries:
1. **Reappointment of Previous Auditor:** - Yes, the previous auditor can be reappointed even after their term has expired. This can be done through due process as per the Companies Act, 2013.
2. **Appointment Process:** - If the previous auditor is willing to continue, they can be appointed at an Extraordinary General Meeting (EGM) of the company. The procedure involves passing a resolution at the EGM for their appointment.
3. **Term of Appointment:** - The auditor can be appointed annually if both parties agree to this arrangement. There is no mandatory requirement under the Companies Act to appoint the auditor for a fixed term of 5 years. Annual appointment is permissible as long as it complies with the company's Articles of Association and all other statutory requirements.
### Procedure to Reappoint the Auditor:
- **Call for EGM**: Issue a notice of the EGM to all shareholders, specifying the agenda item for the appointment of the auditor.
- **Resolution**: Prepare a resolution proposing the reappointment of the previous auditor for a one-year term. Ensure that the resolution includes the terms of appointment, remuneration, and any other relevant details.
- **Passing the Resolution**: The resolution must be passed by a majority of shareholders present and voting at the EGM. Record the voting results accurately.
- **Form Filing**: File Form ADT-1 with the Registrar of Companies (RoC) within 15 days of passing the resolution. Form ADT-1 notifies the RoC about the appointment of the auditor.
### Key Considerations:
- Ensure compliance with the company's Articles of Association regarding the appointment of auditors. - Keep proper documentation of the EGM proceedings, including minutes of the meeting and copies of the resolutions passed. - It's advisable to consult with a company secretary or legal advisor to ensure all procedures are followed correctly.
By following these steps, you can effectively reappoint the previous auditor on an annual basis as per their request, provided it aligns with the company's governance and legal requirements.
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