Respected Sir, I have Few doubts in Company Audit 1. Pls do Resolve them.

1. Sir, it is mentioned in Section 141(3)(d) that if a relative holds security or interest in the company of Face value <= 1,00,000 then the person can be appointed as an auditor of the company. If that is so if relative holds security or interest in either the holding co or subsidiary co or associate co or co – subsidiary Co of face value as small as saying Re 1, would in such case the person would not be eligible to appointed as an auditor of the company. Sir, i want to know is there any drafting mistake in law or have I understood it in the wrong sense?
2. Sir, in Section 139(1) if the company does not appoint the auditors at its first AGM can we conclude that the First auditors are reappointed?
3. Sir, in Rule 3 of Companies Audit and Auditors Rules if the auditor’s Appointment is not ratified by the members of the company at the AGM the BOD would appoint another auditor after following the procedure laid down under the act. Now, I want to know is that connected with Section 140(4) dealing with Appointment of auditor other than retiring auditor at the AGM.
Waiting for a reply from your Side Sir.

5 answers

Answer to 3rd Query :- if doubt is not solved please ask it again in answer section


Answer to Second Query 
Yes they can be reappointed, no problem 
I think you are worried about 1+5 = 6 years , more than allowed for individual auditors as per rotation 
So let me clarify , one year terms are not counted for rotation only 5 years terms are counted in rotation
Please elaborate big something else is your doubt 


Sir, I would like to add to the second query little elaborately, take for an example sir, a company has been incorporated, now the first auditors are to be appointed by the BOD within 30 days of registration of company as per Section 139(6), let us consider that the BOD has appointed them so the first auditors would hold their office from the date of appointment  to the conclusion of the First AGM. In meantime, the First AGM has also arrived, now as per the provisions of section 139 ”Every Company shall at its First AGM appoint an Individual or Firm as an auditor of the company and this auditor so appointed would hold office from the conclusion of the first AGM till the conclusion of the Sixth AGM”. Now actually my doubt is if the Company does not appoint an auditor at the first AGM would it trigger the provisions of “Automatic Reappointment of Retiring Auditor” or Would it be Something Else? 


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