MCA clarification on applicability of section 139(5) and 139(7), of the Companies Act 2013.
Ministry
of Corporate Affairs, vide its Circular No 33/2014, dated 31st July, 2014 has
made Clarifications regarding the applicability of section 139(5) and 139(7), of
the Companies Act 2013. The text of this circular is as below;
1.
Doubts
have been raised about applicability of Sec 139(5) and 139 (7) of the Companies
Act, 2013 (New Act) which deal with appointment of auditors by Comptroller and
Auditor General of India (C&AG), to ‘deemed Government Companies’ or Corporations
etc in the manner detailed in section 619B ibid. Stakeholders have pointed out
that the New Act does not contain specific provisions about ‘deemed Government
Companies’ on the lines of section 619B of the old act. Clarifications have
been sought whether, under the new act, such deemed Government companies would
be subject to audit by the C& AG in the same manner as Government
Companies.
2.
The
above issue has been examined and it is clarified that the new Act does not
alter the position with regard to audit of such deemed Government Companies
through C&AG and thus such Companies are covered under sub- sections (5)
and (7) of section 139 of the New act.
3.
Further
it has also been observed that the words “any other company owned or controlled,
directly or indirectly……………by the Central Government and partly by one or more
State Governments’’ appearing in sub sections (5) and (7) of section
139 of the New Act are to be read with the definition of ‘control’ in section
2(27) of the New Act. Thus documents like Articles of Association and shareholders
agreements etc. envisaging control under section 2(27) are to be taken into
account while deciding whether an individual company, other than those referred
in paragraph 1-2 above, is covered under section 139(5)/139(7) of the New Act.
4.
Clarifications
has also been sought about the manner in which the information about
incorporation of a company subject to audit by an auditor to be appointed by
the C&AG is to be communicated to the C&AG for the purpose of
appointment of first auditor under section 139(7) of the New Act. It is hereby
clarified that such responsibility rests with both, the government concerned
and the relevant company. To avoid any confusion it is further clarified that
it will primarily be the responsibility of the company concerned to intimate to
the C&AG about its incorporation along with name, location of registered
office, capital structure of such a company immediately on its incorporation.
It is also incumbent on such a company to share such intimation to the relevant
Government so that such Government may also send a suitable request to the
C&AG.
You
can download this circular from the following link;
Thanks & Regards:
KASHIF ALI & ASSOCIATES
Company
Secretaries
268,
Business India Complex,
Uday
Park, New Delhi-110049
Call us : +91 9718483209
