Skip to content

CS Executive · Company Law and Practice · Accounts and Auditors

Sunrise Textiles Pvt Ltd was registered on 1 June. Its Board of Directors failed to appoint the first auditor. Under the Companies Act, 2013, what is the correct position for the company, which is not a Government company?

If the Board of a non-Government company fails to appoint the first auditor within thirty days of registration, it must inform the members. The members must then appoint the first auditor at an extraordinary general meeting within ninety days. That auditor holds office until the first annual general meeting concludes.

  1. AThe Board must inform the members, who must appoint the first auditor at an extraordinary general meeting within ninety daysCorrect
  2. BThe Board must inform the members, who must appoint the first auditor at an extraordinary general meeting within thirty days
  3. CThe Comptroller and Auditor-General of India must appoint the first auditor within sixty days
  4. DThe first auditor is appointed by the Registrar of Companies within ninety days

Explanation

For a non-Government company, the Board appoints the first auditor within thirty days of registration. If the Board fails, it must inform the members, who appoint the auditor at an extraordinary general meeting within ninety days. The thirty-day option wrongly applies the Board's period to the members. The CAG route applies only to Government companies.

Did you get it right without looking?

One question tells you little. A timed set on Accounts and Auditors shows your real accuracy, how long you take and where you lose marks.

Practise Accounts and AuditorsFree diagnostic mock

More Accounts and Auditors questions