Whether Ratification of Appointment of Statutory Auditors is to be shown in the Notice of AGM of a Company due to Recent Amendment in the Company Act 2013 ?

Whether Ratification of Appointment of Statutory Auditors is to be shown in the Notice of AGM of a Company due to Recent Amendment in the Company Act 2013 ?

AMENDMENT TO SECTION 139 OF THE 

COMPANIES ACT, 2013

At AGM - ratification of auditors appointment is now not required  after enforcement of relevant sections of companies (amendment) Act, 2017 w.ef.7th May, 2018

MAHINDRA & MAHINDRA LIMITED AGM NOTICE

The Following can be found in Mahindra & Mahindra Limited AGM Notice for the year 2018.

Messrs -------, Chartered Accountants, were appointed as Statutory Auditors of the Company at the ----st Annual General Meeting held on 4th August, 2017.

Pursuant to Notification issued by the Ministry of Corporate Affairs on 7th May, 2018 amending section 139 of the Companies Act, 2013 and the Rules framed thereunder, the mandatory requirement for ratification of appointment of Auditors by the Members at every Annual General Meeting (“AGM”) has been omitted, and hence the Company is not proposing an item on ratification of appointment of Auditors at this AGM.

DISCLOSURE IN THE BOARD REPORT

Thus , one can make a disclosure in Board report about change in law and hence , there is no requirement of ratification would be needed now.

However , there are instances where if the Board of Directors of a company  decide to ratify the appointment of auditors at every AGM even if the same is not required as per recent amendment Act.

CAN THEY CONTINUE TO DO SO?

Yes. They can continue to do so. The amendment to Company Act 2013 does not bar a company to ratify the appointment of auditors at every Annual General Meeting of the Company .


Company Law Committee Report of MCA

This is mainly based on Company Law Committee Report of MCA.

Committee felt that it is advisable to omit the ratification of auditor provision in every AGM as it defeats the very objective of appointing the auditors for five years.

This would also remove the inconsistency prevailing in the Act.