Section 246

Appointment, removal and fee of auditors.—

(1) The first auditor or auditors of a company shall be appointed by the board within ninety days of the date of incorporation of the company; and the auditor or auditors so appointed shall retire on the conclusion of the first annual general meeting.

(2) Subject to the provisions of sub-section (3), the subsequent auditor or auditors shall be appointed by the company in the annual general meeting on the recommendation of the board after obtaining consent of the proposed auditors, a notice shall be given to the members with the notice of general meeting. The auditor or auditors so appointed shall retire on the conclusion of the next annual general meeting.

(3) A member or members having not less than ten percent shareholding of the company shall also be entitled to propose any auditor or auditors for appointment whose consent has been obtained by him and a notice in this regard has been given to the company not less than seven days before the date of the annual general meeting. The company shall forthwith send a copy of such notice to the retiring auditor and shall also be posted on its website.

(4) Where an auditor, other than the retiring auditor is proposed to be appointed, the retiring auditor shall have a right to make a representation in writing to the company at least two days before the date of general meeting. Such representation shall be read out at the meeting before taking up the agenda for appointment of the auditor:

Provided that where such representation is made, it shall be mandatory for the auditor or a person authorized by him in writing to attend the general meeting in person.

(5) The auditor or auditors appointed by the board or the members in an annual general meeting may be removed through a special resolution.

(6) Any casual vacancy of an auditor shall be filled by the board within thirty days from the date thereof. Any auditor appointed to fill in any casual vacancy shall hold office until the conclusion of the next annual general meeting:

Provided that where the auditors are removed during their tenure, the board shall appoint the auditors with prior approval of the Commission.

(7) If the company, fails to appoint—

(a) the first auditors within a period of ninety days of the date of incorporation of the company;

(b) the auditors at an annual general meeting; or

(c) an auditor in the office to fill up a casual vacancy within thirty days after the occurrence of the vacancy; and

(d) if the appointed auditors are unwilling to act as auditors of the company;

the Commission may, of its own motion or on an application made to it by the company or any of its members direct to make good the default within such time as may be specified in the order. In case the company fails to report compliance within the period so specified, the Commission shall appoint auditors of the company who shall hold office till conclusion of the next annual general meeting:

(8) The remuneration of the auditors of a company shall be fixed—

(a) by the company in the general meeting;

(b) by the board or by the Commission, if the auditors are appointed by the board or the Commission, as the case may be.

(9) Every company shall, within fourteen days from the date of any appointment of an auditor, send to the registrar intimation thereof, together with the consent in writing of the auditor concerned.

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