Procedure for appointment of first Auditors

1. Convene Board Meeting after giving notice to all the directors within one month from the date of incorporation of the company [Section 286] to discuss besides others the following matters. To pass a resolution for appointing first auditors of the company to hold office till the conclusion of the first annual general meeting. Obtain a written certificate from the auditor to the effect that the appointment, if made, will be in accordance with the limits specified in (Section 224(1B). Note that the provisions of sub-section (1B) of Section 224 will not apply on and after the commencement of the Companies (Amendment) Act, 2000 to a private company. If the Board fails to do so within 30 days after the incorporation of the company, hold a general meeting by issuing notices in writing at least 21 clear days before the date of general meeting with relevant explanatory statement and pass an ordinary resolution. (Intimate) the auditors of the Company within 7 days from the date of appointment.

2. 3. 4.

5. NOTE

As per sub-section (5), the power to the appointment of the first auditor of a company is vested in the Board. According to it, the Board must appoint the first Auditor within one month from the date of registration of the company. The date of registration means the date mentioned at the foot of the certificate of incorporation issued by the Registrar. The first auditor appointed by the Board shall hold office until the conclusion of the first annual general meeting of the company. Prior to the date of the Board meeting at which the Auditor is proposed to be appointed, the company must obtain a written certificate from the proposed Auditor to the effect that the appointment, if made, will be in accordance with the limits specified in sub-section (1B) of section 224. This requirement does not apply in respect of appointment in a private company. The company should give intimation of the appointment to the Auditor appointed by the Board within seven days of the date of the Board meeting at which he is appointed. Sub-section (5) of section 224 does not provide that the provisions of sub-section (1), its proviso and subsection (1A) shall apply in the case of appointment of the first auditors. In case the Board does not appoint the first auditor pursuant to sub-section (5), the appointment may be made at a general meeting. The limit of 30 days for the appointment of the first auditor stipulated under section 224(5), is not applicable in the case of appointment of the first auditor by the members in a general meeting. The appointment at a general meeting will be made by an ordinary resolution.