Appointment of Auditor Under New Companies Bill, 2013
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Appointment of Auditor under new Companies Bill, 2013 (Companies Act)
The appointment of auditor under new Companies Bill, 2013 has made major changes in appointment procedure and tenure of appointment in comparison to the Companies Act, 1956. Section 224 to 233 of the Companies Act, 1956 and Chapter X covering Clause 139 to 148 of the new Companies Bill, 2013 (the new Companies Act) deal with audit and auditors of the Company. This article is based on this comparison between new and old procedure of appointment of auditor in company.
Appointment of First Auditor
As per section 224(5) of the Companies Act, 1956, the first auditor or auditors of a company shall be appointed by the Board of directors within one month of the date of registration of the company; and the auditor or auditors so appointed shall hold office until the conclusion of the first annual general meeting. If the Board of director fail to appoint first director then the shareholders has power to appoint first auditor any time at general meeting for the period starting from the date of registration until the conclusion of the first annual general meeting of the company. The time period under the Companies Act, 1956 has not specified that when shareholder will appoint its first auditor, if the Board fail to appoint first auditor within one months.
At the other hand, the shareholders has power to appoint first auditor in general meeting with in a period starting from the date of expiry of one month from the date of registration of the company till the date of issue of notice of AGM to the shareholder for conducting AGM, giving detail of appointment of first auditor in AGM.
Whereas, under sub-clause (6) of clause 139 to the new Companies Bill, 2013 says that the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.
The clause 139(6) under the Companies Bill, 2013 give an extra duty on Board that if it failed to appoint first auditor then it will inform to the members for calling extraordinary general meeting for appointment of auditor, but such clause not specified when the Board will intimate to shareholders for calling EGM, it may be any time before the end of 90 days from the date of AGM.
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