Appointment of Auditor


Appointment of Auditors


After incorporation of a company, the first Auditor must be appointed by the Board of Directors. The Auditor will typically hold term till the conclusion of the AGM. After which the Auditor shall be appointed in the AGM who shall hold office till conclusion of 6th AGM of company or 5 years.


 The appointment of an Auditor can also be made for a period of 1 year, renewable at each Annual General Meeting.


Before the appointment of the Auditor, a written consent along with Certificate must be obtained from the CA, that he/she is eligible for appointment as Auditor of a company and that the proposed appointment is in accordance with the Companies Act.


The appointment of First Auditor of the Company must be completed by the Board of Directors within 30 days of incorporation. In case the Board of Directors fail to appoint an Auditor, the members of the company must be informed. The members will then be required to appoint an Auditor within 90 days at an Extra Ordinary General Meeting. An Auditor so appointed will hold office until the conclusion of 1st Annual General Meeting.

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Rotation of Auditors


While re-appointing Auditors for a limited company or specified company, it is important to be aware of the regulations pertaining to rotation of auditors. Individuals as an Auditor cannot be appointed as an Auditor for a term of more than 5 years. A firm of Auditors cannot be appointed as Auditors for more than two terms of 5 years. An Auditor who has completed his/her term of 5 years will also not be eligible for re-appointment for 5 years from completion of his/her term.


While rotating Auditors of a company, the following points must be taken in to account by the Board of Directors:







Casual Vacancy of Auditor


Any casual vacancy of the auditor must be filled by the Board of Directors within 30 days by appointing a new Auditor in the outgoing Auditors place. If the casual vacancy is on account of a resignation of an auditor, then the appointment of the auditor must be approved at an Extra-Ordinary General Meeting convened within 3 months of the recommendation of the Board.



Re-appointment of Retiring Auditor


A retiring auditor can be re-appointed at an Annual General Meeting if:





If at any Annual General Meeting, no auditor is appointed or re-appointed, the existing auditor will continue to be the auditor of the company.



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