Term of appointment of Auditor Section 139(1)

[CS ladda Pune]

Dear Friends,

Facts of the case:

i) ABC Private Limited Company in which Company wants to appoint auditor for the term of one year instead of Five year for 2015-2016.

 ii) But the Auditor has objected to appoint for the term of One year. As per Auditors' view, Company should appoint Auditor for the term of Five years.

Query:

a) What stand shall Company consider for doing appointment for 1 year instead of 5 years ?

b) Is it compulsory to appoint Auditor for the term of Five years as per 2013 act ? 

c) Can we discuss about legalities of Companies Act, 2013 on Auditors' Appointment as ONE YEAR and FIVE YEARS ?

Your valuable opinion on above mentioned subject matter is precious for us.

With warm regards,

Pramod

9595271145

[ACS suresh chaudhary]

139 says about 5 year and not 1 year. It cant be done. It will attract penalties. see penalty for contravention of section 139. 5 year appointment subject to ratification by members in each agm. whats the issue then?

[Himanshi Baluni]

Dear Pramod,

This situation is very common these days and a lot of professionals are having a tough time explaining directors that auditor cannot be appointed for just one year. They feel insecure when it comes to appointment for five years. How most of them practically tackled this situation was that they explained the directors that auditors have to be appointed for five years however, they (auditors) can tender resignation in case at any point of time the company wish to discontinue their term. 

Regards,

Himanshi

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[Premnarayan Tripathi]

Dear Friend,

 

Practically, it’s true that some promoters are hesitant to appt. auditor for 5 yrs.

 

However, in strict legal sense and complying provisions of Sec. 139(1), Auditor MUST be appointed for 5 Years ONLY. Else, it’s a clear non-compliance.

 

Thanks & regards,

CS. Premnarayan Tripathi

PRT & Associates,

Company Secretaries

1449/1, 1^st Floor, RMG House,

Mithakhali Gam, Navrangpura,

Ahmedabad - 380 006

(M): +91 89800 26497

E-mail: premnar...@gmail.com

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[Himanshi Baluni]

Correct !

Regards,

Himanshi

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[Vijaya Agarwala]

Dear All,

With due respect, I beg to differ from the views below. In my humble view:

the appointment of Statutory Auditors can be for a term upto 5 yrs.subject to ratification by the shareholders in the annual general meeting.However,if an auditor is appointed for a period of less than 5 yrs., it will construed as one term and his tenure will be treated as completed.He cannot be appointed for the remaining period of yrs. 

Thanks & Regards,

Vijaya Agarwala

Thanks & Regards,

Vijaya Agarwala

[ACS suresh chaudhary]

Dear Vijaya

Rue 3 of the Companies (Audit & Auditor) Rules 2014 

(7) The auditor appointed in the annual general meeting shall hold office from the conclusion of that meeting till the conclusion of the sixth annual general meeting, with the meeting wherein such appointment has been made being counted as the first meeting:

Provided that such appointment shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution.

Explanation.- For the purposes of this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act.

I hope it will clear your doubt.

On Tuesday, December 6, 2016 at 6:46:59 PM UTC+5:30, CS ladda Pune wrote:

[Ravi Hegde]

Dear Member,

   As per my knowledge Mr.Suresh statement is correct.

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Best Regards,
CS Ravi Hedge
Cell 7760063100

[Dharmesh vankar]

As per mah understanding, if u dnt ratifying auditor at agm, that doesn't mean that existing auditor term is expired, he is still the auditor of the company.

Regards,

Cs dharmesh Vankar (swami)

Thanks & With Regards,

CS Dharmesh Vankar
ACS-42284
Cell: 9558 930 408

"Tough time never last, but tough people do"

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From: Ravi Hegde
Sent: ‎08-‎12-‎2016 11:14 AM

To: csmy...@googlegroups.com
Subject: Re: [CSMysore] Re: Term of appointment of Auditor Section 139(1)

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[Vijaya Agarwala]

As per Explanation to Rule 7 of Companies (Audit and Auditors) Rules, 2014 clearly states that if the appointment of an auditor is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as the auditor of the company in pursuance of procedure laid down in the Act.

Hence, the existing auditor cannot continue to hold office.

Thanks & Regards,

Vijaya Agarwala

[Ravi Hegde]

Dear Dharmesh,

     as per Rule 7

7 Removal of the Auditor Before Expiry of his Term

(1) The application to the Central Government for removal of auditor shall be made in Form ADT-2 and shall be accompanied with fees as provided for this purpose under the Companies (Registration Offices and Fees) Rules, 2014.

(2) The application shall be made to the Central Government within thirty days of the resolution passed by the Board.

(3) The company shall hold the general meeting within sixty days of receipt of approval of the Central Government for passing the special resolution.

shareholders have rights to appoint another auditor after Center Government Approval. That means the existing auditor cannot continue to hold office

On Thu, Dec 8, 2016 at 11:40 AM, Dharmesh vankar <dharmesh...@gmail.com> wrote: