- Initial Appointment: After incorporation, the first auditor must be appointed by the Board of Directors within 30 days. If the board fails to appoint, the members must do so within 90 days at an Extraordinary General Meeting (EGM).
- Term: Auditors typically hold office until the conclusion of the 6th AGM or for 5 years, with the possibility of reappointment for a further term of 1 year at each AGM.
- Consent: Before appointment, auditors must provide written consent and a Certificate confirming eligibility as per the Companies Act.
Rotation of Auditors:
- Limits: Individuals can’t serve as auditors for over 5 years, while audit firms are limited to two terms of 5 years each. After a term, auditors are ineligible for reappointment for 5 years.
- Considerations: The period served prior to the Act’s commencement counts toward the tenure limit. Incoming auditors can’t be associated with outgoing auditors under the same network. A 5-year break fulfills the rotation requirement.
Casual Vacancy:
- Fill Within 30 Days: Any casual vacancy must be filled by the Board within 30 days. If due to resignation, an EGM must approve the appointment within 3 months.
Re-appointment of Retiring Auditor:
- Conditions: A retiring auditor can be re-appointed at an AGM if not disqualified, hasn’t expressed unwillingness, and no special resolution against re-appointment is passed.
- Continuation: If no auditor is appointed or re-appointed at an AGM, the existing auditor continues.https://fintaxbytes.com/
