A. First Auditor
The Board of Directors must appoint the first auditor within 30 days of incorporation.
The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).
B. Subsequent Auditor
At the first AGM, the members appoint an auditor.
The auditor holds office from the conclusion of that AGM until the conclusion of the 6th AGM (i.e., a term of 5 years).
C. Conditions for Appointment
Before appointment:
1.Written consent of the auditor must be obtained.
2.Auditor must provide a certificate confirming eligibility under Section 141.
3.The company must inform the auditor of the appointment.
4.The company must file notice of appointment with the Registrar of Companies (ROC) within the prescribed period (Form ADT-1).
D. Casual Vacancy
If a casual vacancy arises (other than by resignation), the Board fills it within 30 days.
If the vacancy arises due to resignation, the Board fills it within 30 days and the appointment must be approved by shareholders at a general meeting within 3 months. The auditor holds office until the next AGM.
2. Resignation of Auditor (Section 140)
Procedure
When an auditor resigns:
1. He/she submits a resignation letter to the company.
2. The auditor must file a statement indicating the reasons for resignation with:
- the company, and
- the Registrar of Companies (ROC), within 30 days of resignation (Form ADT-3).
Consequences of Non-Compliance
- Failure to file the required statement attracts penalties under Section 140(3).
3. Removal of Auditor Before Expiry of Term
An auditor cannot be removed casually. The company must:
1. Obtain prior approval of the Central Government.
2. Pass a special resolution in a general meeting.
3. Give the auditor a reasonable opportunity of being heard.
| Particulars |
Provision |
| First Auditor |
Appointed by Board within 30 days of incorporation |
| Subsequent Auditor |
Appointed by members at AGM |
| Tenure |
Till conclusion of 6th AGM |
| Casual Vacancy (other than resignation) |
Filled by Board within 30 days |
| Casual Vacancy due to resignation |
Board + shareholders' approval within 3 months |
| Auditor's Resignation |
File ADT-3 with ROC within 30 days |
| Removal before term |
Central Government approval + Special Resolution |