a) The first auditors of a company shall be appointed by the directors within 60 days of incorporation of the company [252(3)]
b) The first auditors will hold office till the first annual general meeting [252(3)]. c) If the directors fail to appoint the first auditors, the members shall appoint the first auditors, provided further that the auditors such appointed shall not be removed during the tenure expect through a special resolution [(252(6)].
d) Where the first auditors are not appointed either by the directors or by the members within 120 days of incorporation of the company, the Securities & Exchange Commission of Pakistan (Commission) will appoint the auditor [252(6)].
(a) At each annual general meeting the company (members) shall appoint the auditors [252(1)]. (b) The auditors shall hold office from the conclusion of that meeting till the conclusion of next annual general meeting [Section 252(1)].
(c) If no auditors are appointed at annual general meeting Commission shall appoint an auditor. To exercise this power the company must give notice to Commission within one week of these powers having become exercisable [252(7)].
Provided that an auditor or auditors appointed in a general meeting may be removed before conclusion of the next annual general meeting through a special resolution [252(1)]. Casual Vacancy
a) Any casual vacancy shall be filled by directors. [Sec 252(4)]. b) Auditors so appointed shall hold office till next annual general meeting.[Sec 252(5)] c) If directors do not appoint auditors to fill casual vacancy within 30 days, Commission may appoint an auditor.[Sec 252(6)]
Commission’s powers to appoint auditors [252(6)]
The Securities & Exchange Commission of Pakistan may appoint an auditor if the following situations arise: a) First auditors are not appointed within 120 days from incorporation; b) Subsequent auditors are not appointed in annual general meeting; c) Casual vacancy is not filled within 30 days; and
d) Auditors appointed are unwilling to act as auditors.
To exercise this power, the company must give notice to Commission within one week of its powers becoming exercisable.
Auditors Time of
Within 60 days
Directors Till first
Members Members shall appoint 1st
auditors at a general meeting
within 120 days. After 120
days SECP may make the
AGM Members Till next
SECP If auditors are not appointed
in Auditors AGM. AGM,
SECP may appoint auditors.
Within 30 days
of the vacancy
Directors Till next
SECP After 30 days of vacancy.
Vacancy of the vacancy
AGM SECP may appoint
Remuneration of Auditors [252(8)]
Fixation of remuneration of auditors depends upon the authority appointing the auditors, i.e. i) If auditors are appointed by directors, directors shall fix the remuneration. ii) If auditors are appointed by COMMISSION, COMMISSION shall fix remuneration. iii) In all other cases, the members (Company) shall fix the remuneration. Note:
Minimum hourly rates are also recommended by The Institute of Chartered Accountants of Pakistan (ICAP) which is specified in members’ Handbook Volume II (Part II ATR-14). SUMMARY
Appointing Authority Remuneration Fixed by
a) Directors Directors
b) Commission Commission
c) In all other case Members (Company)
Procedure for Change of Subsequent Auditors/ Removal of Auditors / Appointment of New Auditors (Section-253)
New auditors can be appointed in place of retiring auditors if the following requirements are fulfilled. a) Notice from a member is required for a resolution at the AGM (253(1)). b) The member shall give notice to the company at least 14 days before the AGM...