12 May 2009
hi, 1. Please tell me what is the period for which a Statutory Auditor or a CA can be appointed by a company is it according to financial year or any time?
2. What if the company wants to discontinue with the Statutory Auditor does the company need to pre inform the auditor what is the time the changes can be done & how ? What are the things to be taken care of ...?
12 May 2009
1. As per Section-224 of Companies Act, 1956 Every company shall, at each annual general meeting, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting and shall, within seven days of the appointment, give intimation thereof to every auditor so appointed.
So an Auditor can be appointed by the shareholders from one AGM to the next AGM.
DISCONTINUATION OF STATUTORY AUDITOR
There may be 3 kind of removal in companies act.
1. Company may remove Ist auditor in GM by passing OR as mentioned in section 224(5). for this special notice is not required. Procedure of sec.225(2) & (3) shall apply.
2. under section 224(7) a company may remove statutory auditor before the AGM with the prior approval of CG. for this also special notice is not required. Procedure of sec.225(2) & (3) shall apply.
3. Lastly an auditor may also be removed by the company at the AGM as per the provisions of section 225(1). Special notice is required for the same and procedure given in sec. 225(2) & (3) required to be followed.
Please go through all the sections mentioned above.
REASON/LOGIC BEHIND NO CG APPROVAL REQUIRED FOR REMOVAL AT THE AGM
As at the AGM the removal is in the handa of shareholders and not in the hands of management. That's why law exempts the CG approval for this. On the other hand in removal before the expiry of the term he may be removed by management unreasonably for not agreeing to management's wrong demands. Hence CG's approval is required to prevent auditor's independence.
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