Resolution for Appointment of Auditor: A Draft

What is this resolution for?

Resolution for Appointment of auditor:

The resolution provided in the below paragraphs is for appointing a statutory auditor. Section 139(1) of the Companies Act 2013 specifies that every company has to appoint a statutory auditor at its Annual General Meeting. The auditor so appointed holds office until the next 5 years subject to his fulfillment of eligibility criteria. After the said period, the company may either appoint a fresh auditor who again holds office for another 5 years or may also re-appoint the existing one. Hence, every 5 years, a company either appoints a new auditor or re-appoints the existing auditor at its AGM.

Key points

Statutory auditors are appointed by the company’s members in an annual general meeting and they are to hold office until the conclusion of every 6^th AGM.
As per the second proviso of section 139(1) of the Act read with Rule 4 of Companies (Audit and Auditors) Rules, 2014, it is stipulated that the written consent of the auditor must be taken before appointment.
If at any AGM, no auditor has been appointed or re-appointed, then the existing auditor shall continue to be the auditor of the company.
One thing that must be taken care of while re-appointment is Section 139(2) which lays down the restrictions on the rotation of auditors. Certain companies prescribed under Rule 5 of Companies (Audit and Auditors) Rules, 2014 are prohibited from appointing an auditor for more than a consecutive term of 5 years.
Once an auditor is appointed by a company, it is duty-bound to inform the concerned auditor of such an appointment.
In addition to this, the company is also mandatorily required to intimate the Registrar of Companies of such an appointment. This is to be done by filing Form ADT-1 with ROC within 15 days from the date of the meeting in which the appointment is made.
In the case of government companies, the Comptroller & Auditor General shall appoint the statutory auditor within a period of 180 days from the start of a financial year and he shall hold office until the conclusion of the AGM.

Draft Resolution for Appointment of Auditor

Given below is a draft resolution to be passed at an AGM for the appointment of an auditor in a company.

On Company Letterhead

Ordinary Resolution

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE ANNUAL GENERAL MEETING OF THE MEMBERS OF (COMPANY’s NAME) HELD AT THE REGISTERED OFFICE OF THE COMPANY AT (ADDRESS…) ON (DATE) AT (TIME)

Appointment of Auditors

Proposed by: Mr. ……………………………

Seconded by: Mr. ……………………………

The following Resolution having been proposed and seconded by the aforementioned two Members, was put to vote as an Ordinary Resolution:

“Resolved that pursuant to the provisions of Section 139 and other applicable provisions if any, of the Companies Act, 2013 and the Rules framed thereunder, as amended from time to time, M/s……………………, Chartered Accountants, (Firm Registration No. ……………….) be and are hereby appointed/re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the ………………. Annual General Meeting of the Company (subject to ratification of their appointment at every AGM), at a remuneration of Rs. ………………../- (Rupees ……………….only) for the year …………………….. and Rs. ……………./- (Rupees ……………….only) per year for the subsequent ……………….. years plus reimbursement of out of pocket expenses and service tax, as applicable.

Resolved further that the Board of Directors be and are hereby authorized severally to notify the said auditor(s) about his/their appointment and file the necessary e-forms with the Registrar of Companies (ROC), ______________ and to perform all such acts, deeds, and things that may be necessary to give effect to the above resolution.”

___________________________________________________

For (COMPANY’s NAME)

(Name of Director)

Director

DIN: ___________

Date: ___________

On a show of hands, the Chairman declared the aforesaid Ordinary Resolution carried unanimously.

(Extracts of this specimen resolution are taken from this Source: https://www.icsi.edu/media/webmodules/Drafting_Pleadings_Appearances_22112022.pdf)

Note: The resolution given above is only for reference purposes and it should be used only after adhering to the provisions of the relevant Acts and rules (if any) that may be applicable for the time being in force.

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