APPOINTING STATUTORY AUDITOR IN A COMPANY

Every company shall appoint a statutory auditor who shall be responsible to audit Company’s financial books, records, and information.

A statutory auditor must be a Chartered Accountant as per the Chartered Accountants Act 1949.

Appointment of First Statutory Auditor

First Statutory Auditor is that Auditor who is immediately appointed by the Company after the incorporation.

The Board of Directors shall appoint First Auditor within 30 days from the date of the incorporation.

Steps for appointment of Auditor by Board:

Hold meeting of Board of Directors.
Pass Board resolution for appointment of First Auditor.
Send Letter of Appointment to the First Auditor.

If not so appointed by Board of Directors, the Shareholders in their meeting shall appoint First Auditor within next 90 days.

Steps for appointment of Auditor by Shareholders:

Hold meeting of Board of Directors and recommend the appointment of First Auditor by Shareholders.
Send notice to shareholders and hold meeting.
Pass Ordinary Resolution for appointment of First Auditor.
Send Letter of Appointment to the First Auditor.

Tenure: The First Auditor so appointed shall serve till the end of the first annual general meeting.

Appointment of auditor in first annual general meeting

Subsequently, Statutory Auditor shall be appointed in the First Annual General meeting of the Company.

Steps to appoint Statutory Auditor:

Issue notice of Annual General Meeting (AGM) for appointment of statutory auditor.
Appoint auditor in AGM by passing ordinary resolution.
Intimation to Statutory Auditor about his appointment in AGM.
File Form ADT-1 with Registrar within 15 days of such appointment.

Tenure: The Statutory Auditor so appointed shall be appointed for maximum 5 years.

Pre-requisite for appointment of Statutory Auditor:

Obtaining written consent from the auditor for his appointment as an auditor,
Obtaining auditor’s certificate stating about his eligibility for appointment and he is not disqualified for appointment under the Companies Act.

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