M/s AT & Co. is a proprietary firm and M/s VK Associates, a partnership firm, had been appointed as the Joint statutory auditors of PQR Ltd. for…
CA Intermediate · Corporate and Other Laws · MTP · September 2025
M/s AT & Co. is a proprietary firm and M/s VK Associates, a partnership firm, had been appointed as the Joint statutory auditors of PQR Ltd. for & consecutive years from 1.4.2021 to 31.3.2026. The shareholders had delegated the responsibility to fix the auditor's remuneration to the Managing Director, Mr. D. On 29.03.2023, there was a change in the constitution of M/s AT & Co. from proprietorship to a partnership. In light of the above facts and referring to the provisions of the Companies Act, 2013, answer each of the following questions: (i) Does the Company have the authority to delegate the power to the Managing Director to fix the remuneration of the statutory auditors? (ii) Whether annual ratification necessary since the auditor is appointed for a consecutive term of 5 years? (iii) Whether a revised ADT-1 Form is required to be filed with the details of the new firm, M/s AT & Co. after the change in its constitution?
Suggested Answer and Working Notes:
(i) As per section 142 (1) of the Companies Act, 2013, the remuneration of the auditor of a company shall be fixed in its general meeting or in such manner as the general meeting may determine. Accordingly, the shareholders, through a resolution in the general meeting, may delegate the authority to fix the auditor's remuneration to the Managing Director or any other person, provided this is done in accordance with the prescribed procedures under the Act. (ii) Under the Companies Act, 2013, there is no requirement for shareholders to ratify the appointment of auditors at every Annual General Meeting. (iii) In case the change in the constitution of the firm (in this case M/s AT & Co.) is taking place, the company shall treat it like an appointment of a new auditor and accordingly file the ADT-1 Form after the conclusion of the (forthcoming) AGM to be held for the year 31.03.2023.
Topics: Audit and Auditors
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