As per section 139(6) of the Companies Act, 2013, the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within 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 appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting of the company. Before such appointment is made, a company is required to obtain written consent/certificate about the eligibility etc. from the proposed auditor.
Section 139(11) of the Companies Act, 2013 states that where a company is required to constitute an Audit Committee, all appointments, including the filling of a casual vacancy of an auditor shall be made after taking into account the recommendations of such committee. In case of company that is required to constitute an Audit Committee, the committee, and, in cases where such a committee is not required to be constituted, the Board, shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as auditor and whether such qualifications and experience are commensurate with the size and requirements of the company. Where a company is required to constitute an Audit Committee, the committee shall recommend the name of an individual or a firm as auditor to the Board for consideration and in other cases, the Board shall consider and appoint an individual or a firm as auditor of the company.
As per proviso to sub-section 1 of section 142 of the Companies Act, 2013, the Board may fix remuneration of the first auditor appointed by it.
Procedure for appointment of the First Auditors of a company (other than a Government Company) by the Board-
1
Give proposal to the proposed auditor for appointment as First Auditors of the company
2
Obtain written consent/ certificate from the proposed auditor about the eligibility etc. as per section 141 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014.
3
Issue not less than 7 days’ notice along with agenda and notes on agenda to every director of the company at his address registered with the company. A meeting of the Board may be called at shorter notice to transact urgent business subject to the specified condition(s).
4
Hold a board meeting to consider the appointment of the first auditors of the Company and to pass necessary resolution.
5
Communicate with the auditor about his appointment.
6
You may prefer to file E- Form ADT-1 with the RoC within 15 days of the Board Meeting.
Attachment–
- Board Resolution
- Appointment Letter
Also see Board Resolution for Appointment of the First Statutory Auditor