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.”
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QUESTION & ANSWERS
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A.
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Whether it is Special Business
or Ordinary Business.
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Appointment or Re appointment of Auditor is Ordinary Business so in line
with that Ratification to continuation of Auditor will be ORDINARY BUSINESS.
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B.
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Whether it is Appointment or
Re-appointment?
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This is neither appointment nor re-appointment. It is confirmation of
continuation of Statutory Auditor. Appointment has already been made.
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C.
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Whether ADT-1 will file for
ratification of auditor or Not?
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There is NO need to file ADT-1 for ratification of Auditor.
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D.
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Whether Special Resolution or
Ordinary Resolution will pass for ratification of Auditor?
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As per proviso of Rule 3(7) - ORDINARY RESOLUTION will pass for
ratification of auditor.
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E.
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Whether Company needs eligibility
Certificate from auditor?
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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.
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F.
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Whether Explanatory Statement
required to give for Ratification of Auditor?
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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.
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PROCESS FOR RATIFICATION OF AUDITOR
DRAFTS FOR THE REFERENCE:
v Draft
board resolution:
ITEM NO: To consider the ratification of m/s (name
of firm), chartered accountants as statutory auditors of the Company:
The Chairman informed that M/s (Name of Statutory Auditor Firm),
Chartered Accountants, (FRN-___________________) were appointed by the
shareholders at the (No. Of last Annual General Meeting) Annual General
Meeting to hold office until the conclusion of the (Five years from last Annual General
Meeting) Annual General Meeting subject to ratification by shareholders
at each Annual General Meeting. He further informed that Company has obtained
from the Auditors, a certificate as required under Section 139 of the Companies
Act, 2013 to the effect that they are eligible to continue as statutory auditor
of the Company. The Board considered the matter and thereafter decided that the
ratification of the above named Auditors be recommended to the shareholders at
the forthcoming Annual General Meeting.
After discussions the following resolution was passed unanimously:
“RESOLVED THAT subject to
approval of shareholders at their forthcoming Annual General Meeting, M/s (Name
of Statutory Auditor Firm), Chartered Accountants, (FRN-___________________)
from whom certificate pursuant to section 139 of the Companies Act, 2013 has
been received be and hereby ratified to continue as Statutory Auditors of the
Company to hold office from the conclusion of this Annual General Meeting till
the conclusion of the next Annual General Meeting of the Company at a
remuneration to be mutually decided.”
v Draft of
Notice of AGM:
ORDINARY
BUSINESS:
1. Ratification
of Auditor:
To
consider and if thought fit to pass with or without modification(s) the
following resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to Sections 139, 142
and other applicable provisions, if any, of the Companies Act, 2013 (the “Act”)
and the Companies (Audit and Auditors) Rules, 2014 (“Rules”) (including any
statutory modification or re-enactment thereof, for the time being in force),
the Company hereby ratifies the appointment of M/s (Name of Firm), Chartered
Accountants, (Firm
Registration No. __________), as Auditors of the Company to hold office from
the conclusion of this Annual General Meeting (AGM) till the conclusion of the
next AGM of the Company to be held in the year 2016.”
v Draft
Ordinary resolution:
RATIFICATION OF AUDITOR-ORDINARY RESOLUTION
Proposed
by: (Name of Member)
Seconded by: (Name of Member)
The ordinary resolution set at item no. 2 of the notice pertaining to
the ratification of Auditor and their remuneration, proposed and seconded by
the afore mentioned shareholders and taken up for consideration with the
consent of the Members present.
“RESOLVED THAT pursuant to Sections 139, 142 and other applicable
provisions, if any, of the Companies Act, 2013 (the “Act”) and the Companies
(Audit and Auditors) Rules, 2014 (“Rules”) (including any statutory
modification or re-enactment thereof, for the time being in force), the Company
hereby ratifies the appointment of M/s (Name of Firm), Chartered Accountants,
(Firm Registration No. ________), as Auditors of the Company to hold office from
the conclusion of this Annual General Meeting (AGM) till the conclusion of the
next AGM of the Company to be held in the year 2016.”
The above Ordinary Resolution was thereafter put to vote and on a show
of hands was declared carried unanimously.
v
ELIGIBLITY CERTIFICATE:
LETTER HEAD OF AUDITOR
To Date:
(before the date of Issue of Notice of Board Meeting)
The
Board of Directors,
(NAME OF
COMPANY)
(Registered Office Address of Company)
Dear
Sirs/Ma’am,
Ref: Certificate u/s 139 for
ratification to continue as statutory auditor under the
Companies
Act, 2013
We
were appointed as statutory auditors of (Name of Company) from the conclusion
of (No. of Last AGM) Annual General Meeting (AGM) till the conclusion of the (5th
AGM from last AGM)
AGM
of the Company to be held in the year 2019 (subject to ratification of our
appointment at every AGM).
In pursuance of
requirement of section 139 of the Companies Act, 2013 and rule (4) of Companies
Audit and Auditors) Rules, 2014, we hereby confirm that:
1) The firm is
eligible for ratification and is not disqualified to continue as statutory
auditor under section 141 of the Companies Act, 2013, the Chartered Accountant
Act, 1949 and rules and regulations made there under;
2)
Our ratification would be as per the terms provided under the Act;
3)
There are no proceedings pending against either of the partners or the firm
with respect to professional matters of conduct.
Thanking
you,
Yours
Sincerely,
(NAME OF FIRM)
Chartered
Accountants
Firm
Registration No. ___________
(Name of
Auditor)
Proprietor
Membership
No. _______
(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES
Company Secretary in Practice from Delhi and can be contacted at
csdiveshgoyal@gmail.com)
Disclaimer: The entire contents of this document have been
prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. The observations of the author are personal view and the authors do not take
responsibility of the same and this cannot be quoted before any authority
without the written
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