Companies Covered by the Order: The Order applies to all companies except certain categories of companies specifically exempted from the application of the Order. The Order also applies to foreign companies as defined in section 591 of the Act. According to sub- section (1) of the aforesaid section, companies falling under the following two classes are construed as foreign companies:
- companies incorporated outside India which, after the commencement of the Act, establish a place of business within India; and
- companies incorporated outside India which have, before the commencement of the Act, established a place of business within India and continue to have an established place of business within India at the commencement of the Act.
In respect of foreign companies, an established place of business in India would include a liaison office. The Order is also applicable to the audits of branch(es) of a company under the Act since sub-section 3(a) of section 228 of the Act clearly specifies that a branch auditor has the same duties in respect of audit as the company’s auditor. It is, therefore, necessary that the report submitted by the branch auditor contains a statement on all the matters specified in the Order, except where the company is exempt from the applicability of the Order, to enable the company’s auditor to consider the same while complying with the provisions of the Order.