Draft Resolution for Ratification of Remuneration of Cost Auditor

Certain class of companies are compulsorily required to appoint one or more Cost Auditors for their companies. The Board of Directors of such Companies are vested with the responsibility to appoint cost auditor on the recommendations of the Audit committee, if any, which shall also recommend remuneration for such cost auditor. [Refer Section 148 of the Companies Act 2013.]

The remuneration recommended by the Audit Committee shall be considered and approved by the Board of Directors and ratified subsequently by the shareholders. In case of other companies which are not required to constitute an audit committee, the Board recommends the remuneration of such cost auditor, which shall be ratified by shareholders subsequently.

Some templates of resolutions to be passed by the shareholders at the Annual General Meeting are given below for reference.

Sample #1: Ratification and approval of remuneration of Cost Auditor

#. To ratify remuneration of cost auditor and in this regard to consider and if thought fit, to pass, with or without modifications, the following resolution as an Ordinary Resolution.

“Resolved that pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, the Companies (Cost Records and Audit) Rules 2014 and the Companies (Audit and Auditors) Rules, 2014 [including any statutory modification(s) or re-enactment thereof for the time being in force], the remuneration payable to M/s. ...................... & Co., Cost Accountants (Firm Registration Number: ..............), appointed by the Board of Directors as Cost Auditors to conduct the audit of the cost records of the Company for the financial year ending 31st March, 20**, amounting to Rs. ....................... (Rupees .......................... Only) as also the payment of applicable tax and reimbursement of out of pocket expenses incurred in connection with the aforesaid audit, be and is hereby approved.”

Sample # 2:  Cost Auditor was appointed on the recommendation of the Audit Committee

#. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148(3) and any other applicable provisions of the Companies Act, 2013, the Companies (Cost Records and Audit) Rules 2014 and the Companies (Audit and Auditors) Rules, 2014 [including any statutory modification(s) or amendment(s) thereto or re-enactment(s) thereof, for the time being in force] and pursuant to the recommendation of the Audit Committee, the remuneration payable to M/s. ................ & Associates, Cost Accountants (Registration Number: .................), appointed by the Board of Directors of the Company as Cost Auditors to conduct audit of the cost records of the Company for the Financial Year ending 31st March, 20**, amounting to Rs. ...................../- (Rupees ........................................ only) (plus GST, allowances and reimbursement of out of pocket expenses), be and is hereby ratified.

RESOLVED FURTHER THAT the Board of Directors, be and is hereby authorized to do all acts, deeds, things and matters and give all such directions as it may, in its absolute discretion, deem necessary, proper or expedient to give effect to this resolution.”

Sample #3: Ratification and confirmation of remuneration of Cost Auditors for the financial year ..........

#. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 and other applicable provisions, if any, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and the Companies (Cost Records and Audit) Rules, 2014 [including any statutory modification(s) or re-enactment thereof for the time being in force], the remuneration payable to M/s. .......... & Associates, Cost Accountants,  having Firm Registration Number: .........................., appointed by the Board of Directors to conduct the audit of the cost records pertaining to ........................... activities of the Company for the financial year ended on 31st March 20**, amounting to Rs. ................. (Rupees ......................... ................... Only) plus applicable taxes and reimbursement of out-of-pocket expenses, if any, be and is hereby ratified and confirmed.

FURTHER RESOLVED THAT the approval of the Company be accorded to the Board of Directors of the Company (including any Committee thereof) to do all such acts, deeds, matters and things and to take all such steps as may be required in this connection including seeking all necessary approvals to give effect to this Resolution and to settle any questions, difficulties or doubts that may arise in this regard.”

Sample #4: More than one Cost Auditor's remuneration ratification

#. To ratify the remuneration of the Cost Auditors for the financial year ending March 31st 20**, and in this regard to consider and if thought fit, to pass, with or without modification(s), following resolution as an Ordinary Resolution:-

“RESOLVED THAT pursuant to the provision of Section 148 and all other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules 2014 (including any statutory modification or re-enactment thereof), the remuneration payable to Cost Auditors i.e. M/s. ............... & Co., M/s. ..................... & Associates and M/s. ...................... who have been appointed by the Board of Directors, as Cost Auditors of the Company to conduct the audit of the cost records of the Company for the financial year ending 31st March 20** amounting to Rs. ..............., Rs. .............. and Rs. ...................... respectively and additional fee of Rs. ............... payable to M/s. ................. & Associates as the lead Cost Auditor, as also payment of Allowances, Goods and Services Tax and out of pocket expenses incurred by the Cost Auditors during the course of Cost Audit of the Units, as per the Company Rules, be and is hereby ratified.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to do all acts, deeds and things and take all such steps as may be necessary, proper or expedient to give effect to this resolution.”

Sample #5: Two or firms of Cost Auditors' remuneration, appointed for different purposes

#. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:-

“RESOLVED THAT, in accordance with the provisions of Section 148(3) of the Companies Act, 2013, including any other applicable provisions of the said Act and any amendments thereto or modification thereof, the remuneration of M/s. .................. & Co., Cost Accountants, appointed by the Board of Directors of the Company as the Cost Auditor to conduct audit of Cost Records maintained by the Company in respect of ‘...........................................’ products, for the financial year 20**-**, at Rs. ........................./- plus allowances, GST and reimbursement of out of pocket expenses incurred, be and is hereby ratified.”

#. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:-

“RESOLVED THAT, in accordance with the provisions of Section 148(3) of the Companies Act, 2013, including any other applicable provisions of the said Act and any amendments thereto or modification thereof, the remuneration of M/s. .................. & Co., Cost Accountants, appointed by the Board of Directors of the Company as the Cost Auditor to conduct audit of Cost Records maintained in respect of all applicable products of the Company, other than ‘...........................................’ products for the financial year 20**-**, at Rs. ........................./- plus allowances, GST and reimbursement of out of pocket expenses incurred, be and is hereby ratified.”



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Relevant Resolution(s):

Board Resolution for Appointment of Cost Auditor under section 148 - available here

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NOTE: The resolution sample(s) here is only for reference, to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder and any other applicable laws to be able to not to miss out anything important while drafting.