Secretarial Practice Relating to Directors and Auditors
Directors and auditors in secretarial work
This domain tests the secretary's role in appointing, recording and communicating matters relating to directors and auditors. It combines eligibility rules, board and member approvals, and statutory filings.
Core rules and concepts
- Directors: appointment requires a valid DIN (except exempt cases), consent in the prescribed form, disclosure of interest and board approval; certain appointments need member approval.
- Disqualifications under Section 164 include unsound mind, undischarged insolvency, conviction for specified offences and non-payment of calls; a disqualified person cannot be appointed.
- Independent directors and women directors are required for prescribed classes of companies; their appointment and resignation must be recorded and filed.
- Auditors: the first auditor is appointed by the board within 30 days of incorporation, otherwise by members; subsequent auditors are appointed at the AGM for five years.
- Auditor eligibility and disqualification are governed by Section 141; the appointment is filed in ADT-1 within 15 days.
- The secretary must issue notices, obtain consents, update registers and ensure filings for changes.
Worked example
At an AGM, the existing auditor's term ends. The members appoint a new firm for five years by ordinary resolution. The company files ADT-1 within 15 days and updates the register. Reasoning: member approval is required at the AGM; the board cannot substitute its own choice for the members' AGM appointment. The filing is evidence of compliance.
Traps that cost marks
Do not appoint a director without DIN or consent. Do not ignore disqualification under Section 164. Do not say the board alone appoints the statutory auditor at every AGM. Do not miss the ADT-1 deadline. Do not confuse the auditor's report with the director's report.