Appointment of Statutory auditor still requires ratification at Annual General Meeting (AGM)?
Effect of non – ratification of the appointment of the auditor was one of the wonders of the Companies Act, 2013. There were so many queries regarding effects of non – ratification of auditor and removal of an auditor. Now, all these long discussions came to end. The Companies Amendment Act, 2017 read with Notification S.O. 1833(E) dated 7th May 2018 deletes provision of annual ratification of the appointment of auditor.
Original Section 139(1) of the Companies Act, 2013 along with its now-deleted first proviso read as under:
Subject to the provisions of this Chapter, every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as may be prescribed:
Provided that the company shall place the matter relating to such appointment for ratification by members at every annual general meeting:
Now during a single term of 5 years, there shall be no requirement for ratification of the appointment of an auditor. This is a big relief for companies, auditors and tribunals
Author Bio
