The issue of appointment of First Auditor of the Company and his subsequent appointments were discussed at length. The relevant provisions as existing in Indian law vis-Ã -vis those prevalent in USA, UK, Australia and Canada were also discussed. The Committee acknowledged the role of the Audit Committee wherever such Committees were mandated, in recommending the appointment of the Auditors to the Board in general.
The Committee recommended that the existing provisions relating to appointment of first Auditor to be made by the Board, failing which by the shareholders and the power of the Central Government to appoint the Auditors whenever the Board/shareholders fail to appoint them were necessary and should continue. The Company should also be required to send intimation to the Registrar of Companies regarding appointment of First Auditors, within 7 days of such appointment.
Subsequent to the appointment of First Auditors, the appointment of Auditors should be done on AGM to AGM basis with a power to the Board to fill any casual vacancy. There should not be any situation where the company is without duly appointed Auditors. Such appointment of Auditors should be made by the shareholders taking into account the recommendations of the Board, which, in turn should be arrived at after obtaining the recommendations of the Audit Committee, where such a Committee is mandated or is in existence.
In case any of the shareholders wish to propose any other Auditor in place of retiring Auditors, this process should also necessarily seek the views of the Audit Committee. There should be an obligation to intimate appointment of Auditor to Registrar of Companies by the Company within 7 days
