Appointment, Ratification, Reappointment of Auditor as per companies act, 2013 with standard formats

Procedure for Appointment of Auditor under Companies Act- 2013


BACKGROUND
It is inevitable that ‘dynamic environment demands constant changes’. One of such change had been made in the Companies Act by notifying the Companies Act, 2013.
In the present article we deal with the provisions of the 2013 dealing with the Auditors of the Company. The auditors of a company play a vital role towards the stakeholders of such company. The Auditors are required to audit the books of accounts of the company and report to the shareholders regarding the affairs of the Company which are carried out by the directors of the Company in the fiduciary capacity
1.    PR      PROCEDURE FOR APPOINTMENT OF AUDITOR:
Appointment of FIRST AUDITOR in case of every company except govt. company or company owned/ controlled by CG/SG/CG and SG [139(6)]:-
§  The First auditor of a company, other than a Government Company, shall be appointed by the BOARD OF DIRECTORS WITHIN THIRTY DAYS OF THE DATE OF INCORPORATION of a company. The auditor so appointed, shall hold office until the conclusion of the first annual general meeting.
§  IF THE BOARD FAILS to appoint the first auditor, it shall inform the MEMBER of company, who shall within 90 days at an Extra Ordinary General Meeting shall appoint auditor.
{There is different view of different persons, persons have view that No time period is mentioned for Board to inform the members about the Non appointment of first auditor.}  
But According to my VIEW: If the Board fails to appoint the First Auditor, an Extra Ordinary General meeting will be called by the Board to appoint the first auditor within 90 days of incorporation.
In case of appointment of First auditor by Board of Director of company pursuant to section 139(6), company is under no obligation to give notice to appointment of First Auditor to the Registrar. THERE IS NO NEED TO FILE ANY FORM WITH ROC FOR APPOINTMENT OF FIRST AUDITOR.
For the company incorporated after 01st April, 2014 first Auditor shall hold office until the conclusion of the first annual general meeting of company.
2.    A      APPOINTMENT OF AUDITOR AT FIRST ANNUAL GENERAL MEETING (AGM):
Every company shall at First Annual General meeting (AGM) appoint an individual or firm as an Auditor to hold office from the conclusion of that meeting till the conclusion of the sixth (6th ) Annual General Meeting (AGM).
§  The duration of auditor of company will be term of consecutive Five (5) years each for Individual and Two terms of Consecutive Five (5) years in case of Auditor Firm.
** BUT the provision of 5 Year and 10 year will not applicable on One Person Company and Small Companies as per Rule-5 The Companies (Audit and Auditor) Rules, 2014.
3. M   MATTER IN RESPECT OF FIRST APPOINTMENT AT AGM:-
A.   Ratification at Every Annual General Meeting (AGM):- [First Proviso of Section-139 (1)]
Although the duration of office is Five (5) years and Ten (10) years, the company will place the matter for ratification at every AGM.
LANGUAGE OF NOTICE OF AGM (ORDINARY BUSINESS):
  To re-appoint Statutory Auditors and fix their remuneration and in this regard to consider and
  if thought fit, to pass with or without modification(s) the following resolution as Ordinary    Resolution:
        
           Resolution:
“RESOLVED THAT pursuant to the provisions of Section 139 and 142 of the Companies Act, 2013 read with Rule 3 of the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/s_____________,  Chartered Accountants, having FRN No. based at ____________based at Laxmi Nagar, Vikas Marg, New Delhi -110092  be and is hereby re-appointed as the Statutory Auditors of the Company for the financial year 2016-2017 and to hold office from the conclusion of this Annual General Meeting until the conclusion of sixth Annual General Meeting (subject to annual ratification by the Members at the Annual General Meeting), and on such remuneration, fee and out of pocket expenses as shall be fixed by the board of Directors of the Company in consultation with Auditors.”
RESOLVED FURTHER THAT any Director of the company be and is here by authorized to file the e form ADT-1 with the Registrar of Companies, Uttar Pradesh & Uttrakhand and to do all such acts, deeds and things and execute such other documents as may be necessary for the purpose of giving effect to this resolution.”
B.   CONSENT AND CERTIFICATE FROM AUDITOR:- [Second Proviso of Section-139 (1)]:
Documents Require from Auditor before Appointment in AGM
→ WRITTEN CONSENT of auditor for such appointment.
→   CERTIFICATE from auditor for such appointment.
→   Under Rule 4 of Chapter-X, Auditor shall state in said certificate that he satisfy the condition given below: (Third Proviso of Section- 139(1);
§  The individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made there under;
§  The proposed appointment is as per the term provided under the Act;
§  The proposed appointment is within the limits laid down by or under the authority of the Act;
§  The list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.
ACCORDING TO ME COMPANY SHOULD ISSUE LETTER TO AUDITOR FOR HIS APPOINTMENT –FORMAT GIVEN BELOW
Procedure for Appointment of Auditor under Companies Act- 2013
C.   INTIMATION TO AUDITOR & NOTICE TO REGISTRAR :- [Fourth Proviso of Section-139 (1)]:
The Company shall with in Fifteen (15) Days of Annual General Meeting (AGM) :
§  Inform the Auditor of his Appointment.
§  File Notice of such appointment with ROC in Form- ADT-1 [
*Earlier auditor used to file Form 23B and inform ROC, now the company is to inform ROC, so in a way they shifted the burden to inform on Company.
Appointment of first auditor in case of govt. company or company owned/ controlled by CG/SG/CG and SG139 (7):- Appointment of first auditor shall be made by CAG within 60 days of registration of the company. If CAG fails to appoint the first auditor within given time then Board of such company shall appoint first auditor within 30 days. If Board fails to appoint the first auditor within given time then it shall inform to members and members shall make the appointment of first auditor within 60 days of information at an EGM. The First Auditor shall hold office till the conclusion of first AGM.
YOU MAY SEE THE FOLLOWING TABLE SHOWING THE RELEVANT PROVISIONS RELATING TO APPOINTMENT OF FIRST AUDITOR OF COMPANY.
S1
Which Section will apply for appointment of First Auditor
Section 139(1)
2
Who will Appoint First Auditor
Board of Directory By Passing Board Resolution in Board Meeting
3
Time Limit for Appointment of First Auditor
Within 30 days from Incorporation of Company
4
Who will Appoint Fist Auditor if Board of Director Fails to Appoint First Auditor
Members of Company by Passing of Ordinary Resolution in Extra Ordinary General Meeting
5
What is the Tenure of Office of First Auditor?
First Auditor may hold office until conclusion of First Annual General Meeting
6
Whether First Auditor can be remove before First Annual General Meeting, If appointed in Board   Meeting.
Yes, By Board of Directors
7
Whether First Auditor can be remove before First Annual General Meeting, If appointed in General Meeting.
Yes, by Members of Company by Passing of Special Resolution, After obtaining the previous approval of Central Government in that behalf
8
Whether First Auditor can be Appoint Through AOA & MOA.
No, the Appointment of First Auditor by the Articles of Company will not be valid.
APPOINTMENT OF AUDITOR IN CASE OF RESIGNATION
DRAFT ATTACHED FORMATS
1. RESIGNATION LETTER BY AUDITOR
Date: 01/08/2015
To
The Board of Directors
ABC PRIVATE LIMITED
Jagadhri
Subject: Resignation as Statutory Auditor of the Company
Dear Sir
We are tendering herewith our resignation as Statutory Auditor of the Company for the Financial Year 2014-15 due to our pre-occupation. So, we request you to accept our resignation with immediate effect and acknowledge the same
For OLD AUDITOR FIRM & Associates
Chartered Accountants
CA XYZ
M. No.
FRN.
CONSENT LETTER AND CERTIFICATE FROM AUDITOR
AS PER SECTION-139 & 141 OF COMPANIES ACT -2013
Date: 01/08/2015
To,
The Board of Directors
M/S. ABC PRIVATE LIMITED
JAGADHRI, YAMUNA NAGAR, 135003
Dear Sirs,
Ref: Consent & Certificate for appointment as auditor under the Companies Act, 2013
We are in receipt of your communication inquiring as to our consent and eligibility for being appointed as statutory auditors of ABC PRIVATE LIMITED from the conclusion of Extra Ordinary General Meeting to be held on 25/08/2015 till the conclusion of the ensuing Annual General Meeting of the Company to be held in 2015. We give our 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, we 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) Our 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 either of the partners or the firm with respect to professional matters of conduct.
Thanking you,
Yours Sincerely,
For and Behalf of,
M/s NEW AUDITOR FIRM
Chartered Accountants
CA                  
M. No.
FRN No.
NOTICE FOR CALLING EGM
Notice is hereby given that the First Extra Ordinary General Meeting of FY 2015-16 of the Members of ABC PRIVATE LIMITED will be held on Tuesday 25/08/2015 at 11.00 A.M. At Registered Office of the Company to transact the following as Special business:-
SPECIAL BUSINESS:
ITEM NO. I. To consider and, if thought fit, to pass with or without modification the following as Ordinary resolution:
RESOLVED THAT pursuant to the provisions of Section 139 (8) of the Companies Act, 2013 and other applicable provisions of the Act, if any, including any statutory modifications, amendments or re-enactments thereof, consent of the Company be and is hereby accorded to appoint Mr.                 of M/s. NEW AUDITOR FIRM, Chartered Accountants, Jagadhri (FRN: ICAI-012322N) as Statutory auditor of the company who shall hold the office as statutory auditor till the conclusion of ensuing General Meeting on such remuneration as may be decided by the Board..
FURTHER RESOLVED THAT any of the Board of Directors, be and is, hereby empowered and authorised to take such steps, in relation to the above and to do all such acts, deeds, matters and things as may be necessary, proper, expedient or incidental for giving effect to this resolution and to file necessary E Forms with Registrar of Companies.”
FOR ABC PRIVATE LIMITED
DATE: 01/08/2015
PLACE:
                                                                                                                Name of Director
DIRECTOR/ Managing
                                                                                                                                                   DIN:
Address:
NOTES:
1.      a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself. the proxy need not be a member of the company.
2.      The proxies to be effective should be deposited at the registered office of the company not later than 48 hours before the commencement of the meeting.
3.      The relevant Explanatory Statement in terms of Section 102 of the Companies Act, 2013 is enclosed herewith.
Explanatory statement pursuant to section 102 of the companies act, 2013
Item No. 1:
(a). As Mr. A of M/s. OLD AUDITOR FIRM & Associates, Chartered Accountants, …..City has resigned on 01/08/2015 from post of Statutory Auditor of the Company. Hence, for the audit of accounts of the company for the FY 2014-15, the Board proposed the name of M/s. NEW AUDITOR FIRM, Chartered Accountants, ….City, (FRN: ICAI-            ) to be appointed as Statutory Auditor of the company pursuant to the provisions of Section 139 (8) of the Companies Act, 2013. As the Board of Directors of a Company cannot, except with the consent of Members in General Meeting by an ordinary resolution, appoint any person as an Auditor of the Company. The Directors therefore, recommend the Ordinary Resolution for approval of the shareholders. 
(b). None of the Directors, Key Managerial Personnel of the Company or their relatives or any of other officials of the Company is, in any way, financially or otherwise, concerned or interested in the resolution.
FOR ABC PRIVATE LIMITED
DATE: 01/08/2015
PLACE:
                                                                                                                Name of Director
DIRECTOR/ Managing
                                                                                                                                                   DIN:
Address:
BOARD RESOLUTION FOR APPOINTMENT OF FIRST AUDITOR OF THECOMANY 
CERTIFIED TRUE COPY OF RESOLUTION PASSED BY THE BOARD OF DIRECTORS IN THEIR FIRST MEETING HELD ON MARCH 21, 2016 AT 11.00A.M AT THE REGISTERED OFFICE OF THE COMPANY AT (ADDRESS)
____________________________________________________________________________
The Chairman informed that the first Auditors of the Company are to be appointed in the Board Meeting within 30 days from the date of incorporation of the company. He informed that he had got consent of, M/s__________________, for their appointment as the first Auditors of the Company. The Board considered and passed the following resolution unanimously:
 “RESOLVED THATpursuant to the provisions of the Section 139 and other provisions applicable, if any, of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014, ___________________, having FRN No. based at_______________ based at Laxmi Nagar, Vikas Marg, New Delhi -110092 from whom a written consent to act as first Auditor along with certificate pursuant to section 139(1) of the Companies Act, 2013, has been received, be and are hereby appointed as the first auditors of the Company to hold office until the conclusion of the first Annual General Meeting of the Company at such remuneration as may be agreed between the Board and the said Auditors.
RESOLVED FURTHER THAT Mr. _______________, Director of the Company be and is hereby severally authorized to file the necessary form with Registrar of Companies and to intimate the Auditors of their Appointment and to do all other acts, deeds, things which are necessary to give effect to the same.”
CERTIFIED TRUE COPY OF RESOLUTION
FOR ABC PRIVATE LIMITED
DATE: 25/08/2015
PLACE:
                                                                                                                Name of Director
DIRECTOR/ Managing
                                                                                                                                                   DIN:
Address:
                                                                                                                            
INTIMATION LETTER TO NEW AUDITOR
March 16, 2016
To-
M/s , __________________
Chartered Accountants,
Laxmi Nagar, Vikas Marg, New Delhi -110092
                                                                         
Sub: Appointment as a First Statutory Auditor of the Company
Dear Sir`s,
With reference to the above subject, we wish to appoint your firm as the first statutory auditors of our company i.e., M/s ___________________________in term of provisions of section 139, 140 and 141 of the Companies Act, 2013 and rules made there under.
You have requested that your firm audit the financial statements of the Company as defined in Section 2(40) of the Companies Act, 2013 (‘2013 Act’), for the financial year(s) 2015-16. The financial statements of the Company include, where applicable, consolidated financial statements of the Company and of all its subsidiaries, associate companies and joint ventures. You are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter.
Please acknowledge the receipt of this letter
FOR ABC PRIVATE LIMITED
                                                                                                                Name of Director
DIRECTOR/ Managing
                                                                                                                                                   DIN:


1.Ratification of Appointment of Auditors
To consider and, if thought fit, to pass with or without modification(s) the following resolution as an    Ordinary Resolution:
 Resolution:
“RESOLVED that pursuant to the provisions of Section 139 and all other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, the Company hereby ratifies the appointment of  M/s _________________l,  Chartered Accountants, having FRN No. based at ____________based at ______________Laxmi Nagar, Vikas Marg, New Delhi -110092, as the statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting (AGM) till the conclusion of the tenth  AGM of the Company to be held in the year 2017 to examine and audit the accounts of the Company at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Auditors.”






 CS DIVYANSHU SAHNI
 COMPANY SECRETARY
 SPICE GROUP
 Mob: 9871027426
 Email: divyanshu.sahni@yahoo.in


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