LMN Ltd. incorporated with paid-up capital of ₹40 Crore. During the financial year 2019-20, the paid-up capital was increased by ₹30 Crore. The Company Secretary advised that Company needs to appoint the Secretarial Audi

CS Professional · Secretarial Audit, Compliance Management and Due Diligence · PYQS · June 2021
LMN Ltd. incorporated with paid-up capital of ₹40 Crore. During the financial year 2019-20, the paid-up capital was increased by ₹30 Crore. The Company Secretary advised that Company needs to appoint the Secretarial Auditor for Financial Year 2020-21. Due to festive season, few Directors were not available, hence Managing Director suggested to pass the requisite resolution by circulation for appointment of Saxena & Co., Company Secretaries as Secretarial Auditor. Check the validity of suggestion of Managing Director.

Answer & Explanation:

According to section 179 (3) of the Companies Act, 2013, read with Rule 8.4 of the Companies (Meetings of Board and its Powers) Rules, 2014, In addition to the powers specified under said section, the powers to appoint internal auditors and secretarial auditor shall also be exercised by the Board of Directors only by means of resolutions passed at meetings of the Board as per said rule. Accordingly, as per the above provisions, secretarial auditor is required to be appointed by means of resolution at a duly convened board meeting. Therefore, suggestion of the Managing Director is not legally tenable.

Topics: Companies Act, 2013

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