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Clarification of the provisions w.r.t Appointment of Auditor by C & AG under CA 2013

The Ministry of corporate affairs issued a circular no. 33/2014 dated 31.07.2014 in order to provide clarification in respect of the representations received for the appointment of auditors by Comptroller and Auditor General of India for the deemed Government Companies as previously contained in Section 619B of the Companies Act, 1956 i.e. companies where the ownership or control lies with two or more Government Companies or corporations in the manner as provided in section 619B of the CA 1956.

For which the stakeholders have precisely pointed out that the new Companies Act, 2013 does not contain the express provisions with regard to the appointment of auditors in the deemed government companies on the lines of section 619 B, thereby ministry clarified that the new act does not alter the provisions with regard to the deemed government companies through C&AG and thus such companies are covered under sub-section (5) & (7) of section 139 of the new act.

Further it has also been observed that the words any other company owned or controlled, directly or indirectly by the central government and partly by one or more state governments appearing in sub-section (5) and (7) are to be read with the definition of control as contained in section 2(27) of the new act.Thus, documents like shareholders agreements and AOA have to be taken into account while deciding that whether an individual company, other than the deemed government companies is covered under section 139 (5) or (7) as the case may be.

Further another clarification has been provided, in which the information about the incorporation of the company has to be communicated to the C&AG for the purpose of appointment of first auditors in the case of incorporation of the company.It is clarified that the responsibility lies with the both i.e. company and the government but it would primarily be the responsibility of the company concerned to intimate to the C&AG about the incorporation along with the name, location of the registered office, capital structure of the company immediately on its incorporation.

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