The first auditor of a company can be appointed by the Board of Directors within one month of the date of registration of the company to hold office till the conclusion of the first annual general meeting. If the Board fails to appoint the first auditor, the company in general meeting is empowered to make the
appointment. The first auditor or auditors to hold office, until the conclusion of the first annual general meeting, should be appointed by the Board of directors within one month of the date of registration of the company. But the company may, at a general meeting, remove such an auditor or all or any of them and appoint another or others in his or their place, on a nomination being made by any member of the company, notice being given to the members of the company, not less than fourteen days before the date of the meeting. If the first auditor(s) is not appointed by the directors, within one month of registration, the company in general meeting may appoint the first auditor. The auditor of a company normally is appointed by the shareholders by passing a resolution at the annual general meeting; once appointed, he holds office from the conclusion of that meeting to the conclusion of the next annual general meeting. An auditor once appointed may be re-appointed in the next annual general meeting or a new auditor may be appointed in his place. It is obligatory on the part of a company to annually make such an appointment, as well as to give, within seven days of the appointment, intimation thereof to every auditor so appointed or re-appointed. The main aspect of this section are as under:
1. The first auditors are generally to be appointed by the Board of Directors by means of a resolution within one month of the date of registration of the company.
2. The auditors so appointed shall hold office until the conclusion of the first annual general meeting.
3. If the Board of Directors fail to appoint the first auditors, the company at a general meeting may do so.
4. The auditors so appointed by the Board of Directors may be removed by the company at a general meeting and which then may appoint any other auditor.
5. An auditor cannot be appointed as first auditor simply because his name has been stated in the Articles of Association.
6. The first auditor need not be sent intimation by the company of their appointment.
7. The first auditors are themselves not required to inform the Registrar of Companies about their acceptance or refusal of such an appointment.
8. It should be noticed that it is merely a general meeting and not necessarily an annual general meeting in which such a removal/appointment is made.