Think about it this way — when a company holds its AGM (Annual General Meeting) and shareholders are discussing the accounts, who better to answer questions than the person who actually signed the audit report? That's exactly the logic behind Section 146.
The rule is simple: every notice of a general meeting — whether it's an AGM or an EGM — along with any related communications, must be forwarded to the auditor of the company. This isn't optional. The company's management cannot selectively decide to keep the auditor in the loop only sometimes. Once notified, the auditor is expected to attend the general meeting, either personally or through an authorised representative. Here's the catch many students miss — the authorised representative must also be qualified to be an auditor (i.e., a practicing CA). You can't send your articled clerk or a random manager in your place.
Now, attendance isn't unconditional. The company can exempt the auditor from attending. This exemption is important — if the company formally grants this exemption, the auditor is off the hook. But in the absence of such exemption, non-attendance can be a compliance issue. When the auditor does attend, they have the right to be heard — but only on matters that concern them as the auditor. So if there's a discussion about, say, a dividend declaration or a new director appointment, the auditor can't just jump in. But if shareholders are questioning items in the financial statements or the audit report, the auditor absolutely has standing to speak. This section applies to all companies — there's no exemption for small private companies. This is asked frequently as a 4-mark theory question in the exam, often testing whether students know the qualifications required for the representative or the scope of the auditor's right to speak.
Example 1 — Can the representative be a non-CA?
Rajesh & Co. Pvt. Ltd. is holding its AGM on 30th September. The statutory auditor, Mr. Verma (a practicing CA), is unable to attend due to a prior engagement. He sends his senior articled assistant, Ankur, to represent him at the meeting.
Working:
- Section 146 requires that the authorised representative must also be qualified to be an auditor — i.e., must be a member of the ICAI holding a Certificate of Practice.
- Ankur, being an articled assistant, is not a qualified auditor.
- Therefore, Ankur cannot validly represent Mr. Verma under Section 146.
Answer: This representation is invalid. Mr. Verma must send another practicing CA as his authorised representative, or seek an exemption from the company.
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Example 2 — Scope of the auditor's right to be heard
At the AGM of Iyer Textiles Ltd., the following agenda items are discussed:
1. Adoption of financial statements
2. Declaration of dividend of ₹5 per share (total payout ≈ ₹45 lakhs)
3. Appointment of a new independent director
4. Shareholders raise queries about a ₹1.2 crore contingent liability disclosed in the audit report
The auditor, Ms. Krishnan, is present. On which items can she speak?
Working:
- Items 1 and 4 directly concern her as the auditor — she can speak on the financial statements and the contingent liability disclosure.
- Item 2 (dividend) and Item 3 (director appointment) do not concern her as the auditor.
Answer: Ms. Krishnan has the right to be heard on Items 1 and 4 only.
📖 Bare Act text — Section 146, Companies Act 2013
(click to expand)
All notices of, and other communications relating to, any general meeting shall be forwarded to the auditor of the company, and the auditor shall, unless otherwise exempted by the company, attend either by himself or through his authorised representative, who shall also be qualified to be an auditor, any general meeting and shall have right to be heard at such meeting on any part of the business which concerns him as the auditor.