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Ratification of Auditor

Ratification of Auditor

Appointment for 5 Years: {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 meeting.

 

Ratification of Auditor:  {First Provision of 139(1)}

 Act Language: The Company shall place the matter relating to such appointment for

Ratification by members at every Annual General Meeting.

 

Rule 3(7) Proviso: Appointment of Statutory Auditor shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution

 

“As per the above proviso Companies are required to ratify the appointment of Statutory Auditors who was appointed in last AGM for 5 financial years. Therefore from this year, every year in AGM an Ordinary Resolution is to be passed for ratification to continue as Statutory Auditor of the Company.”

 

QUESTION & ANSWERS

A.   

Whether it is Special Business or Ordinary Business.

 

Appointment or Re appointment of Auditor is Ordinary Business so in line with that Ratification to continuation of Auditor will be ORDINARY BUSINESS.

B.   

Whether it is Appointment or Re-appointment?

 

This is neither appointment nor re-appointment. It is confirmation of continuation of Statutory Auditor. Appointment has already been made.

C.   

Whether ADT-1 will file for ratification of auditor or Not?

 

There is NO need to file ADT-1 for ratification of Auditor.

D.   

Whether Special Resolution or Ordinary Resolution will pass for ratification of Auditor?

 

As per proviso of Rule 3(7) – ORDINARY RESOLUTION will pass for ratification of auditor.

E.    

Whether Company needs eligibility Certificate from auditor?

 

As per Section 139(1) Proviso III read with section 141

Before placing the business for ratification of auditor before AGM the Company will obtain an Eligibly certificate from the Auditor.

F.    

Whether Explanatory Statement required to give for Ratification of Auditor?

 

As per Section 102 Explanatory Statement required for the Special business to be transacted in General Meeting. Therefore, ratification of auditor is Ordinary Business.

But it is advisable to give Explanatory Statement in Notice of AGM for Ratification of Auditor.

PROCESS FOR RATIFICATION OF AUDITOR

Ratification of Auditor

Ratification of Auditor

 

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