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Saturday, 23 July 2016

Appointment of First Auditor

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Appointment of first Auditor

We all know that every company shall appoint an auditor (Statutory Auditor of the Company). In my opinion it may be because of lot of reasons, for now let us stick to only two reasons -
  1.  There shall be someone to look after the Financial Affairs of the Company as a lot of Public money was invested in the Companies.
  2. It is difficult for a government to look after all the small, medium and Large companies.  

 It is good for a company, as he/she may be helpful in complying the laws and regulations that govern on the company and to shareholder /  real owners, it is better to have someone on their side, who is capable of reading and writing the financial statements of the company. 

Section 139(6) of Companies Act, 2013 says that “Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a Government Company, shall be appointed by the Board of Directors with 30 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 90 days at an Extraordinary General Meeting Appoints such Auditor shall Hold office till the Conclusion of the First Annual General Meeting.

Source: MCA

By the statement of above Section, we can understand that it is the duty of the Board of Directors to Appoint the Auditor (First) with 30 days of its Incorporation.

For Example, Date of incorporation is 16th Jun, 2016 then the Board of that Particular Shall Appoint the First Auditor with in 30 days that means with 15th July, 2016 it shall do the same. If it fails to do so, then the Board of Directors shall call for an EGM with 90 Days of Its Incorporation and Pass the Resolution to Appoint the First Auditor of the Company who will continue to be in office till the Conclusion of the First annual general Meeting.

In order to have a record of Compliance with the Companies Act, 2013, the company has to file the ADT-1 (For Appointment of Auditor) with in time as Prescribed i.e., within 15 Days from the date of Event (Board Meeting). If not, it may be difficult to show that company have complied with the Companies Act, 2013.

If there is a delay in filing the Additional Fee will be levied as per Rule 12 of the Companies (Registration of Offices and Fees) Rules, 2014.

For Information about Fee and Addition Fee Details Click Here

For Calculating Additional and Fee applicable for the MCA site Click Here