Annual general Meeting or AGM is a yearly gathering of shareholders and directors. This is the time when shareholders and executives of a company interact with each other on various aspects of the company including financial performance. Shareholders can use this opportunity to express their concerns.
Today, we will discuss right and responsibility of auditor in a company annual general meeting which will address certain general questions like;
- Is it mandatory to forward notices and other details of general meetings to the company auditor?
- Is it mandatory for the auditor to attend general meetings of the company?
- Is it required by law to read audit report in an annual general meeting of the company?
- Can a person other than company auditor attend annual general meeting on behalf of the company auditor?
As per section 146 of Companies Act 2013, all notices of, and other communications relating to, any general meeting shall be forwarded to the company auditor.
This means all communications and notices related to general meeting is required to be sent to company auditor.
As per Section 231 of old Companies Act 1956, an auditor was entitled to attend general meetings of company but he was not bound by law to attend such meetings. Now, this provision has been changed in new Companies Act 2013.
Section 146 specifies that the company auditor shall, unless otherwise exempted by the company, attend either by himself or through his authorized representative who shall also be qualified to be an auditor, any general meeting and shall have right to be heard at such meeting on any part of the business which concerns him as the auditor.
This clarifies that company auditor or his authorised representative is required to attend general meeting. If authorised representative is attending then he or she must be qualified to be an auditor.
As per section 145 of Companies Act 2013, qualifications, observations or comments on financial statements or matters which have any adverse effect on the functioning of the company mentioned in the auditor’s report shall be read before the company in general meeting and shall be open to inspection by any member of the company.
Now, as per the new companies act, auditor report is not required to be read before the company in its entirety. Only the qualifications, observations or comments on financial transactions or matters which have any adverse effect on the functioning of the company mentioned in the auditor’s report is required to be read before the company in general meeting.