APPOINTMENT
OF FIRST AUDITOR
a) Who appoint the First Auditor and
what is the time limit for appointment of Auditor?
As Per Section 139 (6) of
the Companies Act, 2013 First Auditor of a company, other than a Government
Company, is appointed by the Board Of directors within 30 days from the date of
Registration. In case the Board of Directors are not able to appoint such auditor,
then it shall inform the members of the company who shall hold an Extraordinary
Annual General Meeting within 90 days from such failure, and appoint such
auditor.
Section 139(7) of the
Companies Act, 2013 states that in case of a government company or any other
company owned or controlled, directly or indirectly, by the Central Government,
or by any State Government, or Governments, or partly by the Central Government
and partly by one or more State Governments, the appointment of the First Auditor
shall be done by the Comptroller and Auditor General of India within 60 days
from the date of its registration. In case the Comptroller and Auditor General
is unable to appoint such auditor then the Board of Directors of the said
company shall appoint such auditor within 30 days from the date of such
failure. In case the Board of Directors of such company also fails to appoint
such auditor, it shall inform the members of the company who shall hold an
Extraordinary Annual General Meeting within 60 days of such failure and appoint
an auditor in such meeting.
Be it stated that the first
auditor appointed as per the aforesaid sections shall hold office till the
first Annual General Meeting. Normally, it is desirable that all the companies
should appoint an auditor.
As per Section 139(1) of
the Companies Act, 2013 r/w Rule 4 of Companies (Audit and Auditors)
Appointment, 2014, the company needs to file Form ADT-1 within 15 days from the
date of appointment with following attachments (Draft is in the folder):
· Written
Consent letter
· Certificate
from auditor that he is not disqualified to be appointed.
· Copy
of Board Resolution.
· Appointment
Letter
Following information will
be required to file ADT-1 other than the above mentioned attachments:
· PAN
Card of the Firm
· Membership
Number of the Firm
· Whether
the appointment of Auditor is within the limit of 20 companies as specified in
sub-section 3(g) of section 141.
b) Tenure of First Auditor
Up to the conclusion of the First AGM.
c) What if the First Auditor resigns
before AGM?
Casual Vacancy will arise, section 139 (8).
2. APPOINTMENT OF
SUBSEQUENT AUDITOR
a) Who
appoint the subsequent Auditor and what is the tenure of appointment?
The auditor is appointed by the members of the Company in Annual General
meeting under Special Business.
Tenure:
From the conclusion of the particular AGM till the conclusion of Sixth
AGM.
3. In case of Casual Vacancy
v As per
Section 139 (8) There are two type of Casual Vacancy:
(a) Due
to resignation of Auditor
(b) Due
to any other reason
Grounds of Casual Vacancy
arising due to any other reason are:
(i) Death
of Auditor
(ii) Disqualification
of Auditor under section 139(9) & 141 of the Companies Act, 2013
(iii) Non
ratification of Auditor
(iv)
Any
other reason
(a) How to fill casual Vacancy in case of casual
vacancy arises due to resignation of Auditor?
As per Section 139(8): If Casual Vacancy Arise due to Resignation of
Auditor then:
The auditor shall be appointed within three months of such resignation
by the Board of Directors by holding a General meeting wherein such appointment
shall be approved by the members of the company and he shall hold the office
till the conclusion of the next annual general meeting. ADT 1 and MGT 14 shall
be filed within 15 days of such appointment.
(b) What if the Casual
Vacancy arises other than Resignation of Auditor?
As per Section 139 (8) If Casual Vacancy arises due to reason other than
resignation of Auditor then such vacancy can be filled by Board of Director
within 30 days from the date of resignation.
Auditor will hold office up to the conclusion of next AGM.
Note: In case of filing of subsequent ADT-1, SRN of previous filed ADT-1
will be required.
4. REMOVAL OF THE AUDITOR
The Auditor can be remove by the following ways:
4.1 Removal of Auditor by the Board of the Directors
4.2 Removal of Auditor by NCLT
4.3 Resignation of the Auditor
4.1 REMOVAL OF AUDITOR BY THE BOARD OF DIRECTORS
a) Can
the Board of the Directors remove the statutory auditor of the Company?
Section 140(1) of the Companies Act, 2013, the only
mechanism for removal of a Statutory Auditor appointed under the Act
before expiry of the term, requires the prior approval of the Central
Government (at present, the powers have been delegated to the jurisdictional
Regional Director).
The following procedures need to be followed are as
follows:
· Pass
Board Resolution
· File
ADT-2 within 30 days of passing Board Resolution for the approval of Central
Government.
· Obtain
approval from Central Government (Now delegated to Regional Director)
· Call
EGM within 30 days from the date of getting approval from the CG
· Pass
Special Resolution & File MGT-14 within 30 days from the date of passing
Special Resolution
b) What is the
procedure to obtain CG approval?
To Obtain CG approval the Company needs to file
ADT-2 within 30 days from the date of passing resolution in the Board Meeting.
The following documents and details are required
and documents attached with Form ADT-2 :
· CTC
of Board Resolution
· Ground
of Removal of Auditor
· Details
of any proceeding pending between Company and the concerned auditor
· Details
of last 3 years Financial Statement qualification
· SRN
of ADT-1
· Details
of Audit Remuneration pendency
· Pendency
of any audit
4.2 REMOVAL OF THE AUDITOR BY NCLT
a) Who can file
an application to NCLT for the removal of Auditor before the expiry of the
Auditor?
As per Section 140(5) of the Companies act, 2013,
the application can be made to NCLT by following Ways:
a) Suo-
Motto
b) Central
Government
c) Company
b) Is it
required to file ADT-3 in case of removal of NCLT? If not, then how to intimate
to ROC?
Yes, it is required to file ADT-3.
The company will file ADT-1 within 15 days from the
date of passing of a resolution for appointment of new auditor in place of
auditor removed by NCLT along with following documents are:
· NCLT
order
· Application
made by a Company
· Any
appointment made by Central Government.
4.3 RESIGNATION BY THE AUDITOR
As per section
140(2) (3) of the Companies act, 2013 and Rule 8 of the Companies (Audit and
Auditors) Rules, 2014 the Company auditor will file ADT-3 within 30 days from
the date of Resignation to Company and ROC.
5 FILING OF ADT-3
a) Is ADT-3
required to be filed after the completion of Tenure?
The
purpose of Form ADT-3 is to intimate the ROC about the termination of the
office of the auditor (whether by way of resignation or in case of death of
auditor) before the expiry of his/her tenure. ADT-3 is not required in
following situations:
· If any new
auditor (other than First Auditor) is appointed in the first AGM, no need to
file ADT-3 as term of the First Auditor is only till the conclusion of first
AGM. However, company shall file ADT-1 towards the appointment of new auditor
appointed post the first AGM.
Information
required to be mentioned in Form ADT-3 are as follows:
· PAN of the
firm/Individual
· Name of the
Auditor or auditor’s Firm
· Membership number
of Auditor or Auditor Firm’s Registration Number
· Address
· Reason of
Resignation
· Any other facts
relevant to the resignation.
6. Maximum Period for which the
Auditor can hold the Office?
Individual:
For 5 Years
Firm: 2
Consecutive terms of 5 years.
Except Company which doesn’t fall
under Section- 139(2) read with Rule-5 of The Companies (Audit and Auditors)
Rules, 2014
· All unlisted Public Companies having paid-up share Capital of Rs. 10 Cr.
or more
· All private Company having
paid-up share Capital of Rs.20 Cr. or more
· All Company having public borrowing from Financial Institutions, Bank or
Public deposits of Rupees 50 Cr. or more
· Listed Company
Note: As
per Section 139 (2) First Proviso, No individual or Firm can be appointed for
next 5 years in the same company after the completion of Tenure.
7. REMUNERATION OF THE AUDITOR
As per
Section 142, it shall be fixed in AGM; Board may fix the remuneration in case
of First AGM.
Further
the remuneration shall be in addition to the fees payable to an auditor
including the expenses but does not include any remuneration paid to him for
any other services rendered by him at the request of the Company.
8. AUDIT COMMIITEE
As per
Section 177 read with rule 4 of Companies (Appointment and Qualification of
Directors) Rules, 2014 following Company is required to constitute the Audit
Committee
· Listed Company
· Every Public
Company having paid up share capital of Rs. 10 Cr. or more; or
· The public
Company having turnover of one hundred Cr. or more; or
· The public
Company which have, in aggregate, outstanding loans, dentures and deposits,
exceeding fifty Cr. rupees.
Board Resolution for Appointment of First Auditor
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED
IN MEETING OF BOARD OF DIRECTORS OF M/S _________________________ PRIVATE
LIMITED (01/20__/20__) AT REGISTERED OFFICE OF THE COMPANY AT
_____________________________ ON ___________DAY THE ___TH DAY
OF ________, 20__ AT 11:00 AM
Item No: 3: APPOINTMENT OF FIRST AUDITOR OF THE COMPANY
RESOLVED THAT pursuant
to the provisions of sub section (6) of Section 139 to Section 142 of Companies
Act, 2013 and other applicable provisions, if any, of the Companies Act 2013
(the ‘Act’) read with the Companies (Audit and Auditors) Rules, 2014, as may be
applicable (including any statutory amendment(s), modification(s), variation or
re-enactment(s) thereof for the time being in force) Mr. _________________,
Proprietor of M/s. ______________ having Membership Number ________,
Chartered Accountants, be and is hereby appointed as the first Statutory
Auditor, of the Company, to hold office as such from this date until the
conclusion of ensuing Annual General Meeting of shareholders of the Company at
remuneration to be mutually agreed upon decided by the Board of Directors and
such First Auditor.
RESOLVED FURTHER THAT Mr. ____________________, Director of the Company (DIN:- _____________)
be and is hereby authorized to do all such acts, deeds, things and matters as
may be required or necessary for giving effect to the above resolution and to
file all necessary e-forms with the Registrar of Companies of N.C.T of Delhi”.
For and on behalf of
_________________ Private
Limited
____________________
(Director)
(DIN: ___________)
Add:
APPOINTMENT LETTER BY COMPANY TO THE AUDITOR
Format of Appointment Letter
Date:-
To,
Mr.
____________
M/s ___________________
Chartered Accountants,
Add:
Dear Sir,
Re: Appointment as statutory auditor of
__________________Private Limited.
This is to inform you that you have been appointed as the statutory
auditor of the Company at 1st Annual General Meeting of the
Company held on __th September, 20__ to hold the office from
this date until the conclusion of its 6th Annual General
Meeting of the shareholders.
The certified true copy of the said resolution is enclosed herewith for
your record and perusal.
Thanking You,
Yours faithfully,
For ____________________________ Private Limited
____________________
(Director)
(DIN: ______________)
____________________________
APPOINTMENT
OF AUDITOR IN GENERAL MEETING
Consent
Letter
On the letterhead of Auditor
CONSENT LETTER AND CERTIFICATE FROM AUDITOR AS PER SECTION-139 & 141
OF COMPANIES ACT -2013
Date:
To,
The Board of Directors
M/S. __________________________ Private Limited
Add:
Dear Sir’s,
Ref: Consent & Certificate for appointment as auditor under the
Companies Act, 2013
I am in receipt of your
communication inquiring as to my consent and eligibility for being appointed as
statutory auditors of _________________________ PRIVATE LIMITED from the
conclusion of __ Annual General Meeting of the Company to be held on __________
till the conclusion of its __th Annual General Meeting of the
Company to be held in 20__. I give my consent for being appointed as statutory
auditor of the Company subject to Shareholders’ approval.
Further, in pursuance of
requirement of section 139 of the Companies Act, 2013 and rule (4) of Companies
Audit and Auditors) Rules, 2014, I hereby confirm that:
1) The firm is eligible for
appointment and is not disqualified for appointment under section 141 of the
Companies Act, 2013, the
Chartered Accountant Act, 1949 and rules and regulations made there under;
2) My proposed appointment
would be as per the term provided under the Act;
3) The proposed appointment
is within the limits laid down by or under the authority of the Act;
4) There are no proceedings
pending against me or the firm with respect to professional matters of conduct.
Thanking you,
Yours Sincerely,
For and Behalf of,
M/s ___________________
Chartered Accountants
_______________
______________
M. No.
COP No.:
Intimation to Auditor for Appointment
Date:-
To,
Mr.
________________________
Chartered Accountants,
Regd Add:
Dear Sir,
Sub.: Seeking Consent and Certificate.
Ref.: The Companies Act, 2013.
We are planning to hold the
1st Annual General Meeting of M/s ______________________________ Private
Limited (“the company”) on the ___th Day of _________, 20__ in
accordance with the provisions of Section 139 of the Companies Act, 2013 (“the
act”) the company needs your consent and certificate under section 141 of the
act for your appointment as Statutory Auditors of the company for financial
year commencing from _____ till the financial year ended 20___.
Thanking You,
Yours faithfully,
For __________________________ Private Limited
_______________________
(Director)
(DIN:__________________)
Add:
Resolution for Auditor Appointment:
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED
IN THE ___ ANNUAL GENERAL MEETING OF THE MEMBERS OF _____________________
PRIVATE LIMITED HELD ON ________DAY THE _TH DAY OF ___________,
____ AT _________________________________________________ THE REGISTERED OFFICE
OF THE COMPANY AT 10.00 A.M.
Appointment of Auditor of Company
“RESOLVED THAT pursuant
to provision of section 139 and other applicable provisions , if any, of the
Companies Act, 2013 read with Rule 3(7) of the Companies (Audit and Accounts)
Rules, 2014 (including any statutory amendment(s), modification (s) or
re-enactment(s) thereof for the time being in force), M/s
______________________________., Chartered Accountant (Membership No. ________), from whom certificate pursuant to
section 139 is received be and are hereby appointed as the statutory auditor of
the Company to hold office from the conclusion of this Annual General Meeting
till the conclusion of _____ Annual General Meeting to be held in year
_____subject to the ratification by shareholders in every Annual General and
that Board of Directors are authorized to finalize the engagement and
remuneration”
“RESOLVED FURTHER THAT Mr. _________________, Director of the Company (DIN:-____________)
be and is hereby authorized to do all acts, deeds or things necessary for
giving effects to the above resolution.”
For _______________________
Private Limited
BY ORDER OF THE BOARD
____________________
(DIRECTOR)
DIN-
Add:__________________
Appointment Letter
Date:-
To,
_______________
______________________
Chartered Accountants,
Add:
Dear Sir,
Re: Appointment as statutory auditor of
_________________________ Private Limited.
This is to inform you that you have been appointed as the statutory
auditor of the Company at __ Annual General Meeting of the Company held on __th ______________,
_______ to hold the office from this date until the conclusion of its __th Annual
General Meeting of the shareholders.
The certified true copy of the said resolution is enclosed herewith for
your record and perusal.
Thanking You,
Yours faithfully,
For ___________________ Private Limited
_________________
(Director)
(DIN: _____________)
Add: