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Auditor appointment how long

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

10 September 2014

Dear Friends

We are a private limited company incorporated in August 2006. Our paid up capital is 50 lakhs and turnover for the year ended 31032014 was more than 2 crores. Audit firm of CAs M/s DEF & Associates has been our statutory auditor from day one.

As per above, kindly advise for how many years they can be appointed in terms of section 139 of CA 2013 read with Companies (Audit & Auditors) Rules 2014 in the AGM to be held before 30 September 2014.We have to send them a letter after reappointment in the AGM.

Thanks,

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6 Replies

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 10 September 2014

Rotation of auditor is mandatory in case private company having paid up share capital of Rs. 20 Cr or More or Borrowing from bank & financial institution is Rs. 50 Cr or more.

In your case considering that rotation is not mandatory, you can appoint the auditor who shall hold the office from the conclusion of this AGM till the conclusion of 6th AGM subject to the ratification in every AGM till the 6th AGM by way of passing ordinary resolution

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Shilpa (Company Secretary) (234 Points)
Replied 10 September 2014

Yes, in your case it is not necessary to appoint Auditors on rotation basis.

For this you can refer Rule 5 of Companies(Audit & Auditors) Rules, 2014 [Chapter-10] in which only 3 types of Companies are covered.

i) Listed Comapnies (Sec 139)

ii) Public Company having PSC of Rs. 10 Crore or more.

iii) Private Companies having PSC of Rs.20 Crores or more.

iv) Where Public borrowings are more than Rs. 50 Crores.

Regards

Shilpa

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 10 September 2014

Thanks Mitesh & shilpa for your valuable views. May I ask if the contents of the letter to be sent to auditor after AGM will be like this

"Pursuant to the ordinary resolution adopted in the 8th AGM held on 10th September 2014, we have pleasure in reappointing you as statutory auditor of the Company under section 139 of Companies Act 2013 read with Companies (A&A), Rules 2014 with effect from the conclusion of the AGM till the conclusion of sixth Annual General Meeting ( ? ) at a remuneration of ......plus service tax."

means the 8th AGM will be considered as the first AGM in this case.

Regards,

CS Mitesh Mehta (Company Secretary) (17139 Points)
Replied 11 September 2014

Yes.

You can use the words like this.

"to hold office from the conclusion of this AGM or Eighth (8th) Annual General Meeting until the conclusion of the Thirteen (13th) Annual General Meeting of the Company, subject to ratification of the appointment by the Members of the Company at every Annual General Meeting as per the provisions of the Companies Act, 2013, at such remuneration plus service tax, out-of-pocket, travelling and living expenses, etc., as may be mutually agreed between the Board of Directors of the Company and the Auditors"

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 11 September 2014

Draft of letter of appointment of auditors is attached.

Thanks

Attached File : 9367 1363909 draft of letter of appointment of statutory auditors under companies act 2013.doc downloaded: 266 times