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First auditor of private company

Anil (1638 Points)

30 July 2014

First auditors are appointed by Directors. For any reason if that auditor is not willing to take up audit, can directors appoint any other auditor ? or in this case they are to be appointed in EGM only ? Kindly quote sections

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10 Replies

Arpit Pachisia (CA) (734 Points)
Replied 30 July 2014

Hello Anil,

As per Section 139(6) of the companies Act 2013, Appointment of first auditor of the company

Appointment of auditor shall be made by the Board within 30 days of the registration of the company. If the board fails to appoint the first auditor within 30 days, than the board shall inform the members of the company who shall appoint the first auditor of the company within 90 days by calling EGM.

Thanking You

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Anil (1638 Points)
Replied 31 July 2014

Ori=ginally posted by : Arpit Pachisia
	Hello Anil, As per Section 139(6) of the companies Act 2013, Appointment of first auditor of the company Appointment of auditor shall be made by the Board within 30 days of the registration of the company. If the board fails to appoint the first auditor within 30 days, than the board shall inform the members of the company who shall appoint the first auditor of the company within 90 days by calling EGM. Thanking You

Thanks for your reply Arpit. In the case I have mentioned, Board has not failed to appoint. They have appointed but auditor refused the appointment.

Vandana J Doshi (Practising Company Secretary) (12562 Points)
Replied 31 July 2014

Hi Anil,

The normal procedure for appointment of auditors is that the auditors are first approached for appointment and they will give the declaration as required and then they are appointed by the BOD......

In your case i guess this has not happened....however have you filed Form ADT1 (erstwhile form 23B) for appointment....please revert

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Anil (1638 Points)
Replied 31 July 2014

Thanks for your message Vandana.

The case i have mentioned is not about declaration or informing ROC regarding appointment. The question is - In case of refusal by first auditor appointed by Board to audit for any reason what is the next step as per companies Act 2013. Kindly quote section if possible.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 31 July 2014

Dear Anil,

In your case board has duly appointed the first Auditor through a Board Resolution. However new Auditor refuse to accept the appointment. It means no auditor appointed in the board meeting.

Now as per section 139(6) power to appoint first Auditor lies with the shareholders in the EGM. Now it is duty of the Board to intimate the shareholders about this issue and request them to appoint first Auditor within 90 days as mentioned in section 139(6).

Revert if there is any doubt.

Thanks

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Arpit Pachisia (CA) (734 Points)
Replied 31 July 2014

Hello Anil,

In that case also appointment will be done by the shareholders in the companies EGM.

Anil (1638 Points)
Replied 31 July 2014

Thank you Ankur Sir / Vandana Madam,

I believe if auditor is appointed by AGM , ROC has to be informed

What happens if first auditor is appointed at EXTRA ordinary general meeting and NOT ANNUAL GENERAL Meeting.

The question pertains to a private limited company. Please quote sections if possible.

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Nimit (Article) (35 Points)
Replied 11 September 2014

Can anybody tell me that in a case if company is fail to appoint first auditor in Board meeting within 30 days or also not called any egm within 90 days then what is the procedure to appoint first auditor

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 12 September 2014

My views please:

1) Company takes letter of consent and willingness to act as auditor from the auditor and based on that Board passes resolution for appointment within 30 days u/s 139(6) and auditor is informed accordingly. Consent letter of auditor is in the form of "offer" and Board resolution is "acceptance" and thus contract is complete within the meaning of Contract Act.

2) No return is required to be filed with ROC for such first appointment by the Board.

3) Now auditor does not want to take up the assignment. It amounts to resignation and there is casual vacancy in the office of auditor. Such vacancy can be filled by the Board u/s 139(8)(i) to hold office upto the next AGM. This is to be approved by members in general meeting within 3 months as provided therein.

4) In the AGM auditor can be appointed u/s 139(1) and ADT.1 needs to be filed as an attachment to GNL.2 within 15 days of AGM.

5) In case Board fails to appoint first auditor within 30 days and also fails to call EGM for appointment within 90 days, it will amount to contravention of Sec.139(6) and penal provisions will follow. In such a situation keeping in view spirit of Sec.139(6) it would be advisable to make appointment of first auditor in EGM/AGM only.

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Lakshmi Reddy (Student CS) (22 Points)
Replied 06 October 2015

Hiiii Why is the 90 days(I.e from date of Registration or from date on which the period of 30 days given to board for appointment) in case oappointment of first auditor u/s 139(6),if board fails Pls suggest me