3.6       Query

Appointment of Auditors in a Newly Floated

Private Company.

We shall be obliged to have your opinion whether a firm of Chartered Accountants can be appointed as Auditors of a newly floated Private Company through Company’s Memorandum and Articles of Association. If the reply is in affirmative, please let us know what possible action can be taken by us against the Registrar of Companies, who objected to our appointment in the aforesaid manner.

                                                              Opinion                                                        July 7,1962

The Committee is of the view that a firm of Chartered Accountants cannot be appointed as auditors of a newly floated private company through the Memorandum and Articles of Association. The only method of appointment of the first auditors of a company is laid down in Section 224(5) of the Companies Act, 1956, and the provisions of this Section must always be complied with .The Memorandum and Articles of Association cannot over-ride this Section.

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