Auditor resignation
This query is : Resolved
29 October 2015
Dear All
Please suggest :
If a Auditor has resigned before the AGM. He had signed the balance sheet though.
Need clarification:
1) whether it will be termed as casual vacancy? As he had resigned before his term.
2) There was forthcoming AGM to be held after 8 days. Can we appoint another auditor for a period of 5 years at the AGM or has to be appointed till next AGM? We had appointed for one year.
However, still getting different opinions.
As per Section 139 (8) , if its casual vacancy by resignation, than the board has to fill the vacancy but has to be approved in a general meeting within 3 months. The appointment has to be till forthcoming AGM.
Does general meeting in the section only means EGM?
Please suggest :
If a Auditor has resigned before the AGM. He had signed the balance sheet though.
Need clarification:
1) whether it will be termed as casual vacancy? As he had resigned before his term.
2) There was forthcoming AGM to be held after 8 days. Can we appoint another auditor for a period of 5 years at the AGM or has to be appointed till next AGM? We had appointed for one year.
However, still getting different opinions.
As per Section 139 (8) , if its casual vacancy by resignation, than the board has to fill the vacancy but has to be approved in a general meeting within 3 months. The appointment has to be till forthcoming AGM.
Does general meeting in the section only means EGM?
29 October 2015
The adjective GENERAL should not be confused with the word GENERALLY. It is the meeting of GENERAL members. Thus it is general members' meeting.
It can be of 2 types. Annual "general members' " meeting
Extra Ordinary "general members'" meeting.
The reference in section 139(8) about general meeting refers to any one of the above types.
It can be of 2 types. Annual "general members' " meeting
Extra Ordinary "general members'" meeting.
The reference in section 139(8) about general meeting refers to any one of the above types.
29 October 2015
As per section 139(1) every company shall appoint at its 1st annual general meeting an individual or a firm as an auditor of the company who shall hold office who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.
The tenure of 5 consecutive years is subject to ratification by shareholders at every AGM.
Thus company may proceed on appointing auditor in every AGM, else it can also appoint auditor for 5 years; with a ratification in every AGM. The choice is with the company.
The tenure of 5 consecutive years is subject to ratification by shareholders at every AGM.
Thus company may proceed on appointing auditor in every AGM, else it can also appoint auditor for 5 years; with a ratification in every AGM. The choice is with the company.
29 October 2015
That is correct that as per companies Act, you can appoint auditors for 5 year.
In my case,
1) Auditor has resigned before AGM
2) As per Section 139 (8) - the board recommendation has to be approved in a general meeting within 3 months. And such appointment has to be till next AGM.
3) What's my question is, that we had appointed the new auditor till next AGM, in the opinion that resignation led to casual vacancy and followed the provisions.
However, getting opinions, that we could have done it for 5 years, as the appointment has been done in AGM. Is it correct?
In my case,
1) Auditor has resigned before AGM
2) As per Section 139 (8) - the board recommendation has to be approved in a general meeting within 3 months. And such appointment has to be till next AGM.
3) What's my question is, that we had appointed the new auditor till next AGM, in the opinion that resignation led to casual vacancy and followed the provisions.
However, getting opinions, that we could have done it for 5 years, as the appointment has been done in AGM. Is it correct?
29 October 2015
with the Companies Act, 2013, appointment may be made for 5 years subject to however, RATIFICATION by members in every AGM
29 October 2015
That is correct that as per companies Act, you can appoint auditors for 5 year.
In my case,
1) Auditor has resigned before AGM
2) As per Section 139 (8) - the board recommendation has to be approved in a general meeting within 3 months. And such appointment has to be till next AGM.
3) What's my question is, that we had appointed the new auditor till next AGM, in the opinion that resignation led to casual vacancy and followed the provisions.
However, getting opinions, that we could have done it for 5 years, as the appointment has been done in AGM. Is it correct?
In my case,
1) Auditor has resigned before AGM
2) As per Section 139 (8) - the board recommendation has to be approved in a general meeting within 3 months. And such appointment has to be till next AGM.
3) What's my question is, that we had appointed the new auditor till next AGM, in the opinion that resignation led to casual vacancy and followed the provisions.
However, getting opinions, that we could have done it for 5 years, as the appointment has been done in AGM. Is it correct?
29 October 2015
See, there is a subtle point here.
Although auditor might have resigned,
Is the resignation sanctioned/accepted by members?
Resignation can NOT be viewed as UNILATERAL act of auditor.
Death, insanity, insolvency of auditor may lead to unilateral resignation.
So?..... if the resignation is to be sanctioned in general meeting....the same general meeting is equally empowered to appoint next auditor, and that too for 5 years, if it desires so.
Although auditor might have resigned,
Is the resignation sanctioned/accepted by members?
Resignation can NOT be viewed as UNILATERAL act of auditor.
Death, insanity, insolvency of auditor may lead to unilateral resignation.
So?..... if the resignation is to be sanctioned in general meeting....the same general meeting is equally empowered to appoint next auditor, and that too for 5 years, if it desires so.
29 October 2015
1) The resignation was on 23rd September and the AGM held was on 30th September. The Auditor has filed Form ADT 3 for his resignation.
2) What is your point here, is it casual vacancy or not?
3) Casual vacancy by resignation:
Section 139 (8) ....
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 three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting
4) What you recommend whether the new Auditor whom the board proposed to appoint after the resignation is to be appointed for one year/5 years?
2) What is your point here, is it casual vacancy or not?
3) Casual vacancy by resignation:
Section 139 (8) ....
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 three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting
4) What you recommend whether the new Auditor whom the board proposed to appoint after the resignation is to be appointed for one year/5 years?
29 October 2015
ADT 3 is NOTICE of resignation by auditor.
If the AGM accepts the resignation of auditor with effect from 23/09/2015, then it will lead to the situation of casual vacancy.
If the AGM accepts the resignation with effect from 30/09/2015 i.e. at the conclusion of AGM on 30/09/2015, then it is not the case of casual vacancy.
However, in both the situations, company has the choice to appoint either for 1 year or for 5 years.
Sec 139(8) is aiming at the situations where auditor has resigned half way through, leaving with incomplete audit work.... In your case audit is complete, financial statements are duly signed...
If the AGM accepts the resignation of auditor with effect from 23/09/2015, then it will lead to the situation of casual vacancy.
If the AGM accepts the resignation with effect from 30/09/2015 i.e. at the conclusion of AGM on 30/09/2015, then it is not the case of casual vacancy.
However, in both the situations, company has the choice to appoint either for 1 year or for 5 years.
Sec 139(8) is aiming at the situations where auditor has resigned half way through, leaving with incomplete audit work.... In your case audit is complete, financial statements are duly signed...
29 October 2015
Can we assume any date for the resignation depending upon the acceptance by the members?
I am confused, as in section 139 (8) the general meeting in which the approval has to be done can be AGM also and EGM too.
When we are approving their appointment in AGM .. than what about the sentence till the conclusion of next AGM?
Also, what about Form ADT-1 ? Shall we file two forms? One from 23rd Spetember 2015 mentioning casual vacancy and another for 30th September 2015 mentioning appointment of auditors in AGM?
Dear Experts, kindly help to remove the dilemma.
I am confused, as in section 139 (8) the general meeting in which the approval has to be done can be AGM also and EGM too.
When we are approving their appointment in AGM .. than what about the sentence till the conclusion of next AGM?
Also, what about Form ADT-1 ? Shall we file two forms? One from 23rd Spetember 2015 mentioning casual vacancy and another for 30th September 2015 mentioning appointment of auditors in AGM?
Dear Experts, kindly help to remove the dilemma.
29 October 2015
Auditor has resigned in September, however they have already signed balancesheet for FY 2014-15.
It should not be treated as resignation. You can ask auditor to give 'Unwillingness' letter instead of 'Resignation'.
In the board meeting, in which the accounts are adopted, Board can recommend appointment of new auditor (stating that, retiring auditor has expressed their unwillingness to be reappointed as Auditor). Then, in AGM, Members can approve appointment of new Auditor.
In this case, you do not need to file ADT-3. You just need to file ADT-1 for appointment of new Auditor.
However, I just wanted to know, whether the company had appointed exiting auditor for 5 years or 1 year in 2014???
It should not be treated as resignation. You can ask auditor to give 'Unwillingness' letter instead of 'Resignation'.
In the board meeting, in which the accounts are adopted, Board can recommend appointment of new auditor (stating that, retiring auditor has expressed their unwillingness to be reappointed as Auditor). Then, in AGM, Members can approve appointment of new Auditor.
In this case, you do not need to file ADT-3. You just need to file ADT-1 for appointment of new Auditor.
However, I just wanted to know, whether the company had appointed exiting auditor for 5 years or 1 year in 2014???
30 October 2015
Got the resolution:
Just wanted to share
1) The vacancy will be termed as casual vacancy by resignation
2) The board can appoint within 30 days of the casual vacancy. So in my case, as the AGM is being hold in just 8 days the board had proposed for the new auditor appointment which will be subject to the approval of shareholders in AGM
3) In the AGM, we will have a special business mentioning the approval of the appointment of auditor in casual vacancy till the conclusion of that AGM.
4) We will be having another business of appointing the new auditor for a term of 5 years from the conclusion of that AGM to the conclusion of the 5th AGM.
5) Accordingly two form ADT- 1 will be filed, one for casual vacancy and another for the term of 5 years.
Just wanted to share
1) The vacancy will be termed as casual vacancy by resignation
2) The board can appoint within 30 days of the casual vacancy. So in my case, as the AGM is being hold in just 8 days the board had proposed for the new auditor appointment which will be subject to the approval of shareholders in AGM
3) In the AGM, we will have a special business mentioning the approval of the appointment of auditor in casual vacancy till the conclusion of that AGM.
4) We will be having another business of appointing the new auditor for a term of 5 years from the conclusion of that AGM to the conclusion of the 5th AGM.
5) Accordingly two form ADT- 1 will be filed, one for casual vacancy and another for the term of 5 years.
30 October 2015
Thank you all for your valuable input.
30 October 2015
Hi Neelam, sorry to say, but I really do not agree with your resolution. You are unnecessaryly increasing your compliance.
30 October 2015
You are most welcome.
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30 October 2015
Checked with many listed companies compliances and came to this conclusion. Do let me know, other than increasing the compliances, what is the issue in following the procedure?
30 October 2015
Please refer my earlier comment. I have mentioned the procedure.
If Auditor is giving you unwillingness letter (mentioning that they are not willing to be reappointed as Auditor in upcoming AGM), it won't be termed as Resignation. You just need to ensure that you should get this letter from auditor before the board meeting in which the accounts are adopted.
Is it Listed Company??
If Auditor is giving you unwillingness letter (mentioning that they are not willing to be reappointed as Auditor in upcoming AGM), it won't be termed as Resignation. You just need to ensure that you should get this letter from auditor before the board meeting in which the accounts are adopted.
Is it Listed Company??
30 October 2015
The Auditor has signed the balance sheet and given the resignation thereafter.
Further, he had filed form ADT- 3 for his resignation. He was appointed for a term of 5 years before, subject to the ratification.
Ours is Pvt. Limited Company.
Further, he had filed form ADT- 3 for his resignation. He was appointed for a term of 5 years before, subject to the ratification.
Ours is Pvt. Limited Company.
30 October 2015
Ohk..If he had been appointed for 5 years, then you are right.
However, I do not understand the logic of filing ADT-1 for two times. Please confirm this before filing this.
As far as I know, you are required to file only one ADT-1.
However, I do not understand the logic of filing ADT-1 for two times. Please confirm this before filing this.
As far as I know, you are required to file only one ADT-1.
30 October 2015
Done the inspection as well. Two ADT- 1 has been filed.
I hope, anyone with the same issues will get help of this long discussion.
Thanks
I hope, anyone with the same issues will get help of this long discussion.
Thanks
30 October 2015
Yes. No issues. Filing two forms is not non-compliance. However, I feel that it is not necessary as such.
Anyways, have a nice day.
Anyways, have a nice day.
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