CL : Once Acquired Watch Dog may become Mandate for 5 years

“ONCE ACQUIRED WATCH DOG BECOME MANDATE FOR 5YEARS”

(AUDITORS PROVISIONS AS PER COMPANIES ACT, 2013)

Kanika Rastogi

As we bit aware of the fact that appointment of auditor shall be made by members at First AGM and as per the new regulations of the companies act every subsequent appointment shall be made at 6th AGM. Company shall intimate the auditor about appointment. After intimating, company shall obtain written consent and certificate (in accordance with the conditions prescribed in section 141) from auditor. Then, company is required to file a notice with the registrar about the appointment within 15 Days of the meeting.

The Auditor shall hold office for a period of 5 Years. Company can ratify such appointment at any AGM falling between 5 years from such appointment. In case of listed companies as per the provisions of the Sec.139(2) of the companies act,2013, If an individual is appointed as an auditor for 1 term i.e. for 5 consecutive years then that individual will not be eligible for reappointment for next 5years from the expiry of his term as an auditor of company.

Whereas, if an audit firm is appointed as auditor for 2 term i.e. for 10 consecutive years then that audit firm will not be eligible for reappointment for next 5 years from the expiry of its term as an auditor of company. Audit firm having common partner to the old audit firm of the company will not be eligible for appointment. Any existing listed company is required to comply with the above mentioned provisions within 3 years from the commencement of this act.

If casual vacancy is arising by resignation then vacancy shall be filled by the Company in its meeting within 3 months from the date of recommendation of the Board. Whereas casual vacancy is arising by other than resignation then vacancy shall be filled the Board within 30 days. As per the new provisions shareholders are at liberty to decide by passing resolution that audit partner and the audit team, be rotated every year. Members can pass resolution for every rotation. Members can pass resolution for joint auditors. Liability will remain on the entire audit firm and not the signing partner i.e. liability will be joint and several.

Every Listed Company shall form Audit Committee consisting of minimum 3 directors. Whereas, Majority of directors should be independent and ability to read & understand financial statement. Appointment, remuneration and term of appointment of auditor shall be made after considering the recommendations of the Audit Committee. Committee existing before commencement of this act shall be reconstituted within 1 year of commencement in accordance of above mentioned provisions.