Company auditor appointment procedure and tenure has been changed in companies act 2013 compare to the old provisions of companies act 1956.
In this article, we will be discussing how to appoint company auditor in an annual general meeting and tenure of such appointment.
If you want to know how first auditor is appointed under companies act 2013 and its time period then please read our previous article “Appointment of first auditor as per new companies act 2013”
Section 139 of companies act 2013, deals with appointment of company auditor. According to sub section 1 of section 139, a company shall appoint an individual or a firm of chartered accountants as company auditor in the first annual general meeting.
After such appointment, the appointed auditor will hold office from the conclusion of first annual general meeting to the conclusion of sixth annual general meeting. This means, appointment will be for 5 years. Next appointment will be after 5 years i.e. on the sixth annual general meeting.
However, at every annual general meeting, company should place the matter relating to such appointment for ratification before the members.
Before appointment, company should obtain following two things from the company auditor;
- Written consent to such appointment and
- Certificate stating that it fulfill all the criteria to get appointed
After getting appointed in an Annual General Meeting, company will intimate the auditor about appointment and shall also file a notice of such appointment with the ROC within 15 days from the date of appointment i.e. from the end of AGM.
Such notice shall be filled in form ADT-1. ADT1 is nothing but the earlier form 23B that auditor use to file under old companies act 1956 with the only difference that under new companies act, 2013, ADT1 has to be filled by the company. This means, with the applicability of new provisions, company Auditor is not required to file form ADT-1.
As per Section 139(10), if in any AGM, no auditor is appointed or reappointed, then the existing auditor shall continue to be the auditor of the company.
As per the new companies act 2013, certain companies are required to rotate their auditor compulsorily after a fixed tenure. All other companies except those specified companies can continue the same individual or firm as their company auditor for any number of years.
To know those companies that require to rotate auditor after a fixed tenure please read our article “rotation of company auditors – As per new provisions of companies act 2013”.