According to Section 110 of the Companies Act 2063, every company shall appoint auditor under the act to have its accounts audited. As per the Section 111, the general meeting shall appoint the auditor of the company from the amongst the auditors licensed to carry out audit under the prevailing laws subject to Chapter 18 of the act in case of a public limited company. The act also provides that the board of directors may appoint the auditor prior to holding first annual general meeting. There is no any provision to delegate the authority to anyone for appointment of an auditor. In the case of a public limited company the annual general meeting has authority to appoint the auditor under the terms and conditions as recommended by the Audit Committee as per Section 165 of the act.
As per section 113 of the act, in case of failure to appoint an auditor in the general meeting of the company for any reason or where annual general meeting cannot be held, the auditor is appointed by the Company Registrar‟s Office at the request of the board of directors of the company.
Hence, the companies Act does not have any provision of delegating power of the appointment of the auditor and no one can appoint auditor except the annual general meeting and Company Register’s Office in case of failure to appoint the auditors by the AGM.
In the above context, the appointment of M/s ABC & Co., Chartered Accountants by the board of Nepal Hydro-power Limited is not valid. The Company Register’s Office can only appoint the auditor at the request of board of directors where annual general meeting fails to appoint auditor.