Query: Section 102(2) of the Companies Act, 2013 while defining ordinary business refers to appointment of and fixing remuneration of Auditors. While as per Section 139 of the Companies Act 2013, Auditor appointed for a term of five years needs to be ratified every year in AGM. Does the term as used in Section 102(2), appointment include ratification ?
Answer: Annual Ratification is contemplated in law for ‘continuation of appointment’ of Auditors under Section 139(1) of the Act and Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014. It falls within the scope of ‘appointment’ and hence is an item of ‘ordinary business’ to be transacted at the annual general meeting.