The Tax Publishers

Companies Act, 2013--Statutory Auditor

Appointment and Resignation of Statutory Auditor Under Companies Act, 2013

CS. Pragya Lalwani

The Companies Act, 2013, has laid a focus on a number of matters, so to ensure that interest of all the stakeholders is protected. Faith of all stakeholders is sometimes belied on adverse financial reporting by an auditor. So it becomes very crucial to give an emphasis on conduct of Audit and manner of appointment, removal, resignation of an auditor.

Auditor refers to a person or a firm appointed by the company to carry out examination and verification of accounts and other financial data of the company. Chapter X of the Companies Act, 2013 talks intensively about 'Audit and auditors'. It elaborately talks about the appointment, removal, vacation, resignation, tenure, eligibility, etc., of an auditor in detail. This Chapter holds significant importance as according to Companies Act, 2013 all companies whether private or public, having share capital or not, need to necessarily appoint an auditor, subject to the provisions of the Act.

I. Appointemnt of an auditor

(i) Pre-requisites of appointment

1. Eligibility: An individual would be eligible for the appointment as an auditor only if he/she is a Chartered Accountant.

A firm would be eligible for appointment if its majority of members residing in India are Chartered Accountants. In such case, only the partners who are Chartered Accountants would be authorized to act and sign on behalf of the firm. (Firm includes LLP)

2. Intimation to auditor: The Company ought to inform the auditor about their appointment.

3. Notice to ROC: The Company should file a notice with the Registrar about the appointment in Form ADT-1, within 15 days from the date of conclusion of AGM in which appointment of auditor is made.

4. Ratification: Every year, at the Annual General Meeting, the members may ratify such appointment. Though it is not compulsory to ratify now at each AGM and Auditor can be appointed for a term of Five(5) consecutive years.


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