CA.D.K.BAYYAREDDY (Chartered Accountant) (117 Points)
01 August 2009Dear Friends,
Before the day of AGM say i.e. 29-9-06, statutory auditor of a company has resigned say 27-7-06 and in the AGM it is accepted and auditor not appointed but instead entruted to appoint the auditor to Board of directors after finding the suitable person Board of directors finaly appointed the auditor on 30th March 07 in the extra ordinary meeting. Can his appointment valid??. Thanks
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 01 August 2009
Hi,
No the appointment of Statutory Auditor is absolutely invalid. Where AGM is over without Statutory Auditor's appointment the provisions of Section 224(3) and (4) becomes applicable.
Please go through the above section carefully as they involve approval of Central Govt and failing which you have to pay fine of Rs 5000.
Best Regards
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 01 August 2009
Also note the kind of Casual Vacancy you are talking can only be filled by General Meeting as desired by Proviso to Section 224(6) of the Companies act, 1956 as it involve resignation of Statutory Auditor. GM can not delegate the above power to the Board of directors.
Regards
CA.D.K.BAYYAREDDY
(Chartered Accountant)
(117 Points)
Replied 01 August 2009
| Originally posted by :Ankur Garg | ||
| " | Also note the kind of Casual Vacancy you are talking can only be filled by General Meeting as desired by Proviso to Section 224(6) of the Companies act, 1956 as it involve resignation of Statutory Auditor. GM can not delegate the above power to the Board of directors. Regards |
" |
Thank you sir for your valid reply. Yes, GM cannot delagate power to the Board. Can before the date of AGM and after the date of resignation by the auditor, can EGM can be called and appoint the auditor say on 30-7-06?. and subsequently appoint in the AGM for the financial year ending 31-3-07?. Can this be valid appointment?.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 01 August 2009
Yes that would be a valid appointment. But for convening the EGM don't forget to comply with 21 day notice provision u/s 171. Later on appoint the same auditor in AGM.
Regards
Mamta Batra
(CS)
(376 Points)
Replied 01 August 2009
One situation
Suppose the BODs know tht the Auditor of the company shall resign after the conclusion of AGM (The BODs doesn't mention the same thing in the notice of AGM) and placed his resignation before the members in the AGM.
In this case whether the BODs can suggest the name of the Auditor to the members in the AGM, so that the auditor can be appointed in the AGM only.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 01 August 2009
Hi,
No BOD can not suggest the name of Auditor to the members in that particular AGM and any discussion regarding this would be invalid even with the approval of present members because it should be a specific agenda of AGM.
However in case of SGM u/s 165(7) meeting shall be at liberty to discuss any matter of which previous notice has not been given. The same relaxation is not available in case of AGM or EGM
Further in the above case Section 225 is applicable which requires Special Notice. In that case only course of action would be to adjourned the AGM without appointing the Auditor.
Again 21 days notice is required to be given along with proper Agenda and compliance with Section 225 is mandatory.
Regards
Sheetal Darediya
(CA)
(25 Points)
Replied 20 August 2009
I wants to know whether permission of central government is required in case of private company if no auditor is appointed in AGM
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 20 August 2009
Appointment of auditor by the Central Government (Regional Director)
Section 224(3) provides that if no auditors are appointed or re-appointed at an annual general meeting of a company, the Central Government may appoint a person to fill the vacancy. Therefore, the power of the Central Government to appoint auditors becomes exercisable when no auditors are appointed or reappointed at an annual general meeting of a company.
The Company is required to give intimation electronically to the Regional Director (Powers of the Central Government were delegated to the Regional Director) vide Notification No. GSR 288(E) dated 31st May, 1991) in new e-Form 24A prescribed by Notification No. GSR 56(E) dated 10th Feb., 2006.
Obligation has been cast on the company that within seven days of the Central Government's power u/s 224(3) becoming exercisable, it shall give a notice of that fact to that Government; and if a company fails to give such notice, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
Consequences of failure to pass a special resolution at an AGM for appointment of an auditor under section 224A:—
(a) it shall be deemed that no auditor or auditors had been appointed by the company at its annual general meeting; and
(b) the power of the Central Government under section 224(3), to appoint auditors becomes exercisable.
Circular No. 5 of 1972, dated 21-2-1972 inter alia provides that the Government's power to appoint auditors under section 224(3) becomes available where at an AGM no auditors are appointed or re-appointed. Where auditors are not appointed or re-appointed in accordance with the provisions of the Act including section 224(2), as read with sections 225 and 190, section 224(3) becomes attracted in the matter.
Regards
Sheetal Darediya
(CA)
(25 Points)
Replied 20 August 2009
whether the above circular No. 5 regarding central govt power applicable in case of Private company
Preety
(Company Secretary)
(96 Points)
Replied 08 April 2010
Dear Mr Ankur
I have gone through the resolution for appt of auditor in case of casual vacncy caused by resignation of auditor posted by u on this forum. In the Exp Statement which is reproduced below, u have written that notice from member signifying his intention to appoint new Auditoris required . Which is this notice . Is this a special notice which is reqd under Section 225 . But in case of resignation, do we require any special notice.I am very much confused. Is this notice compulsory.Pl clarify me.
Regards
Preety
Explanatory Statement
The Company has received a notice from member alongwith a letter u/s 224 of the Companies Act, 1956 informing the eligibility signifying his intention to appoint M/s Ram & Shyam, Chartered Accountants, to fill the casual vacancy.
None of the director of the Company is concerned or interested in the proposed resolution.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 08 April 2010
Don't get confused. The notice word used in the Ex. statement does not mean the special notice u/s 225. This notice is a simple notice proposing the new auditor.
Where section 224(6) is applicable section 225 has no role to play.
Preety
(Company Secretary)
(96 Points)
Replied 08 April 2010
Thanks Mr Ankur.
It means no special notice is reqd ,. Only Ordinary re in EGM wil be suffice . Also tell me whether publishing of notice of EGM in newspaer is mandatory .
Regards
Preety
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 08 April 2010
| Originally posted by : Preety | ||
 |
Thanks Mr Ankur. It means no special notice is reqd ,. Only Ordinary re in EGM wil be suffice . Also tell me whether publishing of notice of EGM in newspaer is mandatory . Regards Preety |
 |
Publication of notice of EGM in newspaper is not mandatory. However in case of a listed company intimation of EGM should be given in the newspaper.
Regards
Preety
(Company Secretary)
(96 Points)
Replied 05 May 2010
Hello friends,
Can anyone pl tell me whether Form 23 is reqd to be filed for Ordinary resolution passed for appt of auditor in casual vacancy arising from resignation of existing auditor.
Regards
Preety
CAclubindia
