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What is the Procedure for Appointment of Auditors by Private Limited Company

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Companies Act, 2013 provides appointment of auditor for a Government Company or a company other than that. The appointment of an auditor for a private limited company is specified under section 139 of Companies Act, 2013.

As per sub section (6) of Section 139 the first auditor of a company shall be appointed by its Board of Directors. They shall make an appointment within 30 days of registration of the company. In case they fail to make an appointment they shall inform the members of the company who shall appoint an auditor within the next 90 days in an Extraordinary General Meeting (EGM). The tenure of that auditor shall be till the end of the 1st Annual General Meeting (AGM).

The subsequent auditor shall be appointed in the 1st AGM by the members of the company. The provisions for appointment of subsequent auditors are specified under sub-section (1) of Section 139 of Companies Act, 2013. He shall hold office till the conclusion of the 6th AGM.

Henceforth, every auditor appointed shall hold office till the end of every 6th AGM provided that the appointment of the auditor is ratified at every AGM by the members of the company by passing an Ordinary Resolution.

The company also needs to obtain a written consent from the auditor indicating his willingness to get re-appointed and that he is not disqualified under Section 141 of the Act. The company shall also inform the registrar and the auditor within 15 days of such appointment.

In case there is a casual vacancy, the Board of Directors shall appoint the auditor within 30 days of such vacancy as per Section 139(8) of Companies Act, 2013. If the vacancy arises due to resignation then it shall be filled by the members of the company within 3 months of recommendations made by the Board.

The tenure of the auditor appointed will be till the end of the next AGM. In case no auditor is appointed or re-appointed in any AGM then as per Section 139(10) of the Act, the existing auditor shall continue to be the auditor of the company.

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