Auditor Appointment in Board Meeting, Annual General Meeting and in Casual Vacancy

Appointment of First Auditor of the Company

Section 139(1) of companies Act,2013

Authority        

Board of directors

Timing

within 30 days from the date of incorporation of the company.

Tenure

upto 1st Annual General Meeting of the company, 1st Auditor of the company hold the office of auditor till the 1st Annual General Meeting of the Company.

What If ,Board fails to appoint 1st Auditor :

Section 139(6) of companies act,2013

• Board shall inform the members of the company. Within ninety days at an extraordinary general meeting will be held by members to appoint such auditor
• such auditor shall hold office till the conclusion of the first annual general meeting.

 Query: 90 days will be counted from the date of registration of the company or after 30days of the registration of the company??

Section 139(6) says that Board shall inform the members of the company if Board fails to appoint auditor within 30 days of registration of the company. So the section derives duty on Board to inform the members .

When Board inform, Members responsibility arises. so the 90 days will be counted from the day of  the expiry of 30 days of the board .

Procedure:

Check the Eligibility, Qualifications and Disqualifications of Auditors

Recommendation for appointing an individual or firm as auditor

Documents preparation and intimation to registrar

Appointment of Auditor in Annual General Meeting

Section 139 (1) of Companies Act,2013

Authority        

Members of the Company

Timing

At the Annual General Meeting of the company.

Tenure

Five year, Auditor appointed in Annual general meeting by members of the company will hold office for the next five years.

Example:

AGM held on 30/09/2021, Auditor will be appointed for 2021-2026.

Procedure:

Check the Eligibility, Qualifications and Disqualifications of Auditors

Recommendation for appointing an individual or firm as auditor

Documents preparation and intimation to registrar

Appointment of Auditor in case of casual vacancy:

Section 139 (8) of companies Act,2013

“Casual” word is not defined under Companies Act,2013.So, we can take its general meaning as “not expected, foreseen, or planned”.

In this context, casual vacancy  can be death, disqualification, resignation or removal etc.

Sub section has grouped casual vacancy due to resignation in one group  and other reason for casual vacancy in another group. we can conclude in other group death, disqualification etc may be reasons.

• If such casual vacancy is as a result of other than the resignation of an Auditor

Authority:          

Board of Directors

Timing:

within thirty days from the date of casual vacancy arises.

• If such casual vacancy is as a result of the resignation of an Auditor

Authority:          

Board of Directors will appoint and need to be approved by members of the company within three months of such appointment.

Timing:

Appointment : within thirty days from the date of casual vacancy arises.

Approval by members : Within three months from the date of appointment for approval by members.