The company is regulated by two authorities the shareholders and the directors. The shareholders are the promoters of the company, they elect directors and provide funds to them to operate the company and in return the directors perform business from the funds to generate profits and wealth for the shareholders. Therefore, the Board of directors are under an obligation to present the books of accounts to the shareholders in the Annual General Meeting; so that the shareholders can have to a close look on where their funds are being invested by the company, and what are the effectiveness and genuineness of such investment. Provisions of Companies Act, 2013 applicable to appoint an auditor are as under:
Appointment of auditor in case of a company other than government company [Section 139(1)]:-
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 annual general meeting.
Appointment of auditor in case of government company [Section 139(5)]:-
In the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, the Comptroller and Auditor-General of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of 180 days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting.
Appointment of first auditor in case of a company other than government company [Section 139(6)]:-
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.
Appointment of first auditor in case of government company [Section 139(7)]:-
The first auditor shall be appointed by the Comptroller and Auditor-General of India within 60 days from the date of registration of the company and in case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next 30 days; and in the case of failure of the Board to appoint such auditor within the next 30 days, it shall inform the members of the company who shall appoint such auditor within the 60 days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.
Appointment of auditor to fill casual vacancy [Section 139(8)]:-
In the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Board of Directors within 30 days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within 3 months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting;
In the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within 30 days. In case the Comptroller and Auditor-General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next 30 days.
Section 139(10):-
Where at any AGM no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company.
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