What is an appointment of Auditor in Private Limited Company?

According to section 139(6), the first auditor should be appointed by the Board within 30days of Company incorporation. If the Board of the company fails to appoint the auditor, then an EGM is called within 90 days who appoints the first auditor. The first auditor is in a contract till the 1st Annual General Meeting and the remuneration is decided as per section 142(1) by the Board. The appointment of the first Auditor is governed by section 139(6) which begins with a non-obstante clause and it required consent & certificate from auditor and filing of ADT-1 with the Registrar of Company.

The appointment procedure is as follows:

  • Intimate the proposed auditor(s) about the appointment and also, check the eligibility of the auditor
  • This needs to get consent & certificate from auditor.
  • A recommendation is needed if it is constituted under section 177, under section 139(11)
  • Conducting a Board meeting.
  • The approval of the auditor is done at the first Board Meeting.
  • Update the auditor and file with ROC form ADT-1(to be attached in form GNL-2 as per MCA circular 09/2014 dated 25th April, 2014) within 15 days.

Re-appointment of the Auditor:

Once the Auditor has completed its tenure of 5 consecutive years and if the company is satisfied with the work delivered by the professional then the auditor may be re-appointed. This is carried forward under section 139(9) which states that subject to the provisions of sub-section (1)

  • A retiring auditor can be re-appointed in the General Meeting.
  • He is still eligible for re-appointment.
  • If he has not given a notice in writing expressing about his unwillingness to be re-appointed.
  • A special resolution has not been passed at that meeting appointing some other auditor or providing expressly that he shall not be re-appointed.

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