The First Auditor of a Pvt. Ltd. Company was appointed by Board within one month from the date of incorporation. There was casual vacancy in the office of First Statutory Auditor due to resignation of the first auditor before the first AGM of the company. The above casual vacancy was filled up by the Board of Directors by appointing another CA as First Statutory Auditor of the company. The new Auditor conducted the statutory audit and the Audited Accounts were adopted in the first AGM.
As per proviso to Section-224 (6) (a) of Companies Act 1956, where such vacancy is caused by resignation of an Auditor, the vacancy shall only be filled by the company in General Meeting. Is this appointment of subsequent Statutory Auditor by Board in casual vacancy due to resignation of first auditor is correct ? If not, than what is the status of such new Auditor and what are the penal provisions against the company and the new Auditor under Companies Act 1956?
Your expert comments on the above queries are solicited.
Thanks and with regards,
CAclubindia
