APPOINTMENT OF AUDITOR IN CASUAL VACANCY

TOPIC INSIGHT

This topic mainly discuss about the casual vacancy caused by the auditor of a company (other than a company whose auditor to be appointed by the Comptroller and Auditor-General of India) by resignation.

LEGAL FRAMEWORK

WHAT IS CASUAL VACANCY OF AUDITOR

Casual Vacancy of auditor means vacancy caused due to death, resignation, disqualification of auditor.

Explanation:

Any casual vacancy in the office of an auditor shall, be filled by the Board of Directors within 30 days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within 3 months of the recommendation of the Board and such appointed auditor shall hold the office till the conclusion of the next Annual General Meeting (AGM).

STEPWISE PROCEDURE

1. BM (Board Meeting) to be held after receiving letter of resignation of auditor to fill casual vacancy created by such resignation

2. Send notice to all Director for BM, at least 7 days prior notice is to be sent

3. Conducting BM after ensuring requisite quorum

4. Matters to be discuss in BM

5. Appointment of New Auditor

6. Time, Place, Venue to be decided to Conduct General Meeting (GM).

GM means Annual General Meeting (AGM) or Extra-Ordinary General Meeting (EGM)).

1.Approval of draft Notice for GM

2. Sending notice of GM for which at least 21 days prior notice is to be given to members & Directors

3. Conducting GM

4. Taking Approval of members of the Company by passing ordinary resolution for such appointment of new auditor.

5. Filing of ADT-1 Form within 15 days of Appointment.

FORMS & TIMELINES

1.For Conducting BM: BM to be Conducted within 30 days after receiving letter of resignation from the Auditor.

2. For Conducting GM: within 3 months of the recommendation of the Board (ie., after BM held for appointment of new auditor)

3. Duration of Auditor Appointed to Fill Casual Vacancy: The new auditor who appointed to fill the casual vacancy which caused due to resignation will be holding the office till Next AGM.

4. COMPLIANCE RESPONSIBILITY:

FREQUENTLY ASKED QUESTIONS – FAQ’S

CASE 1: If auditors resign before conducting audit for the previous financial year and before AGM

Ans: Firstly, after receiving resignation letter from the auditor BM to be held within 30 days for appointment of new auditor to fill casual vacancy, then EGM to be held by giving 21days prior notice and take approval of members for appointment of the auditor. And Such auditor will do audit for previous year financial year and will be holding office till next AGM.

CASE:2 If auditor resigns after doing audit for the previous Financial Year and before AGM

Ans:  After receiving resignation letter from the auditor BM to be held within 30 days for appointment of new auditor to fill casual vacancy, then Either AGM or EGM to be held by giving 21days prior notice and take approval of members for appointment of the auditor. And Such auditor will do audit for respective financial year as passed in the resolution and will be holding office till next AGM.