Provision of Ratification of Auditor:
As per Section 139(1) of the Companies Act, 2013, Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.
First Provision of 139(1): The Company shall place the matter relating to such appointment for
Ratification by members at every Annual General Meeting.
Rule 3(7) Proviso: Appointment of Statutory Auditor shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution.
“As per the above proviso company shall appoint an auditor for five years with yearly Ratification in the Annual General Meeting.”
“If the Statutory Auditor is not ratified in AGM then it will be considered as CASUAL VACANCY Section 139(8)(i).”
Process of Ratification of Auditor
- Intimation to the Auditor for providing eligibility certificate : Date of such intimation will be before the date of Board Meeting in which Notice of AGM will be issued.
- Eligibility certificate by Auditor to the company: Date of eligibility certificate will be after the date of letter of intimation and before the date of board meeting in which notice of AGM will be issued.
- Issue of Notice of AGM by company by proposing ratification of such person as continue auditor of the company.
- Issue of intimation letter by the company to Auditor within 15 days of Annual general Meeting.
Ratification means acceptance or confirmation of an agreement that was executed by the confirming party itself. As per explanation to section 139(1) of Companies Act 2013, appointment includes re-appointment. As ratification is not included in appointment, ADT-1 is not required to be filed in case of ratification of auditor.