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Appointment of first auditor

Milan Agrawal (Chartered Accountant) (207 Points)

07 September 2012

Dear All,

A Public Limited Company incorporated on 14th July' 2011 has not appointed any auditor till today i.e. 7th Sep' 2012.

What is the remedy?

Thanks & Regards.

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6 Replies

(Guest)

Compnay require to appoint first auditor within 1 month from the date of registration...as one month lapse ..so now compny can appoint auditor in general meeting by passing ordinary resolution by members...

No need of special notice and no need of approval of CG..

if till first AGM no audiotr appointed then in AGM members can appoint auditor...if Even in First AGM no auditor appointed then company require to inform CG within 7 days and CG will appoint...

Correct me if it wrong..

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Milan Agrawal (Chartered Accountant) (207 Points)
Replied 07 September 2012

Sorry, its 14th July' 2011 not 2012. I have modified the same in my original query.

Aditya Soni (CS Final Student Trainee) (727 Points)
Replied 07 September 2012

Dear Mr Joshi,

Please find below the relevant provisions regarding appointment of first auditor.

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.

Regards,

Aditya