11 July 2011
our co. is listed on stock exchange. We want to change our existing auditor who is located out of state for future better liasoning and other genuine reasons and want to appoint one already identified local CA firm.
As per comanies act sec 224 provisions an statutory auditor holds office from the conclusion of AGM in which he is appointed till the conclusion of next AGM. our next AGM is scheduled in september 11 this year which we can not prepond. Also for removing the auditor before expiry of his tenure central govt approval is required and an resolution in GM needs to be passed.
Considering the above difficulties what we are planning is that we will take resignation from our existing auditor and appoint new firm who will conduct quarterly limited review for 1 quarer ending on june 11 for which we need to submit the report within 45 days to stock exchanges. Afterwards in next AGM scheduled in Sept 11 his appointment would be ratified by shareholders from back date. However as per comanies act sec 224 (6)(a) first proviso, casual vacancy caused by resignation of existing auditor can be filled in by appointment of new auditor in GM only. Please suggest whether ratificaton of appointment of auditor as stated above for carrying out limited review of q1 of FY11-12 in AGM is valid one or we need to first call EGM anyways.
13 July 2011
IT IS AMPLE CLEAR FROM PLAIN READING OF SECTION 224 OF COs ACT, CASUAL VACANCY CAUSED BY RESIGNATION OF AUDITOR CA BE FILLED ONLY IN GM. EVEN BOARD OF DIRECTORS ARE NOT EMPOWERED TO APPOINT AUDITOR IN CASUAL VACANCY CAUSED BY RESIGNATION. THEN WHO APPROVED AUDITOR APPOINTMENT IN FIRST QTR? YOU CANNOT RATIFY THE APPOINTMENT IN AGM BECAUSE CASUAL VACANCY IN THE OFFICE OF AUDITOR ON ACCOUNT OF RESIGNATION CAN ONLY BE FILLED BY GM RESOLUTION. IN YOUR CASE THERE IS NO RESOLUTION VALID FOR FIRST QTR AND RATIFICATION IS NOT A SOLUTION.YOU HAVE TO GO THRU GM.
13 July 2011
If you do not want to go in litigation and if your auditor agrees then 1) Take his resignation and appoint any other C.A firm as the auditor. The vacancy caused is to be filled in the AGM in which a resolution is to be passed for the incomeing auditor.
2) If your auditor is reluctant to resign then take the votes of 1/10th of shareholders for removal of auditor and follow the provision for removal of auditor.
As you are holding AGM on 11th Sept. there is enough time to do the formalities. I can also be contacted at ssunderagarwal@gmail.com
14 July 2011
if existing auditor of the company resigns, then the same can be filled in general meeting ONLY. No central Govenment approval is required in this case.
On the other hand, if auditor is removed, appointment can be done in general meeting with approval of central govt.
In both the cases, new auditor can perform limited review for AY 2011-12 QTR1 provided he has been duly appointed as statutory auditor of the company on that date.
In case you still have query, you can mail me at info@knaca.in or call me at 9999777166
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