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    Appointment of Auditor in AGM for less than the tenure of 5 years

    Posted By : Juhee Goyal / Published on : 11-Apr-2023 12:20 PM / View : 160 / Comment : 1

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    Dear All,

    Can a auditor be appointed for the tenure of less than 5 years in the Annual General Meeting of the Private Company? If yes, is there any exemption notification of MCA for private Company?
    Read more on : tenure years than less auditor appointment

    • As per the Companies Act, 2013, the first auditor of a company is appointed by the Board of Directors within 30 days of incorporation and holds office until the conclusion of the first Annual General Meeting (AGM).

      After the first AGM, the auditor is appointed by the members of the company in the AGM for a period of five consecutive years. However, the auditor may be reappointed for another five-year term only after a cooling-off period of five years has elapsed since the completion of the previous term.


      139(1) Subject to the provisions of this Chapter, 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 and the manner and procedure of selection of auditors by the member of the company at such meeting shall be such as may be prescribed.

      Therefore, the auditor of a private company cannot be appointed for a term of less than five years in the AGM. However, if the auditor appointed in the AGM resigns or vacates the office before the completion of the term, the Board may appoint another auditor to fill the vacancy, subject to ratification by the members at the next AGM. In such cases, the term of the auditor so appointed by the Board will be for the remaining period of the original term.

      There is no exemption notification by the Ministry of Corporate Affairs (MCA) for private companies to appoint an auditor for a term of less than five years in the AGM.Therefore, the general rule of appointing an auditor for a term of 5 years applies to Private Companies as well.

      12-04-2023 / 09:36:04 AM
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