Appointment of Auditor in Section 8 Company

A Section 8 Company is formed with an intention to boost up arts, science, sports, research, education, religion, social welfare and protection of the environment or any other objective. These companies are registered as non-Governmental Organizations under the Companies Act, 2013 which follows the due process of Company Registration. The profit made should be utilised and invested in the company to promote the non-profitable activities of the company.

As per the regulations of Companies Act, 2013, it is essential for Section 8 Company to follow compliances prescribed by the Government. An auditor has to be appointed mandatorily by any Section 8 Company. If a company does not follow the compliances, they can end up paying penalty to the Government.

Who is an Auditor?

An auditor is a qualified individual who is trained to review and verify accounting data of a company. The person has to be recognised as a Chartered Accountant (CA) as per the Chartered Accountant Act 1949 and can be deemed as an Auditor.

What is the purpose of the appointment of the Auditor?

The main purpose of an Auditor in a company is to protect the interests of the shareholders of the company. The auditor is bound by the law to examine and maintain the accounts and update the directors about the financial state of the company.

Appointment of Auditor of Section 8 Company

•  The Auditor is appointed as per Section 139 of the Companies Act.
• The first auditor in a Section 8 Company is to be appointed within 30 days from the date of its incorporation.
• The auditor can be an individual or a firm.
• The auditor has the responsibility to check all the financial filings of the company.
• The Auditor is to be appointed in first Annual General Meeting.
• The Auditor shall hold office from the conclusion of the First Annual General Meeting to the conclusion of the sixth Annual General Meeting that is for five years.
• A notice of Auditor’s appointment must be filed with the Registrar within fifteen days of the Auditor’s appointment.
• All the criteria’s mentioned in Section 141 for eligibility of the auditor must be fulfilled.

Documents Required

1. Consent letter for appointment of an auditor for 5 years
2. Copy of board resolution
3. Intimation letter by the Company

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