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Resignation by Statutory Auditors

Ashok Monga (Adviser) (161 Points)

27 February 2009

After a Statutory Auditor is appointed in AGM held in September 2008, they have opted to resign due to time constraints. For the appointment of new statutory auditors, the private limited needs to pass a resolution at the meeting of the Board of directors of the company or AGM should be held for the purpose. Could you advise?

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21 Replies

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 27 February 2009

The Board may fill any Casual Vacancy in the office of an auditor. But when such vacancy is caused by the resignation of an auditor the vacancy shall only be filled by the company in general meeting.

Any auditor appointed in a casual vacancy shall hold office untill the conclusion of the next annual genral meeting.

Thus in this case the company is required to appoint Auditor in General Meeting.

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Ashok Monga (Adviser) (161 Points)
Replied 27 February 2009

Thanks for the prompt response. I am slightly confused between General Meeting and Annual General Meeting.

One matter which generally requires Special Notice before they are discussed before the meeting is the appointment of (other than a retiring auditor) and the fixing of the remuneration of the statutory auditors.

1. Does this imply that the company has to have a AGM or a General Meeting of the Board of Directors to discuss the resignation, appointment of and fixing of the remuneration of the new statutory auditors. (Incidentally Shareholding of the two directors of the company is 50% each).

2. Does the resolution (based on the clarification) has to be filed with the Registrar of Companies?

Kindly clarify.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 28 February 2009

Dear Ashok Ji,

First of all General Meeting is the Meeting of Shareholders and Board Meeting is the Meeting of Board of Directors.

When the statutory auditors of the Company resignes the resulting casual vacancy can only be filled in the General Meeting of the Company thus the company is required to call an Extraordinary General Meeting and pass a resolution for the same.

The company is not required to file the resolution with the ROC(except in case of Special Resolution) but the auditor so appointed is required to file form 23B within 30 days of the appointment. However, the company may send a certified copy of the resoluiton to the ROC

Ashok Monga (Adviser) (161 Points)
Replied 28 February 2009

Dear Ankur

Your reply has to rest so many doubts which I had. Many thanks for your brief and prompt response.

Warm regards

Ashok Monga

Preety (Company Secretary) (96 Points)
Replied 14 November 2009

Hello everyone.

Mine is a listed Co. Our Auditors who were appted in this AGM In Sept are refusing to continue as Auditors due to their personal reasons. Can anyone pl tell what is the procedure to be followed for appt of new auditor in case of Listed Company. What are the compliances under listing Agreement and with ROC.

Regards

Preety

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 November 2009

Hi,

In your case section 224(6) is applicable.

Only members in general meeting may fill up the casual vacancy under section 224(6) caused by resignation of auditors

Where the casual vacancy is caused by resignation of an auditor, the Board cannot fill up the casual vacancy but place the matter before the company in the extraordinary general meeting for appointing an auditor in respect of the casual vacancy.

Casual auditors shall hold office till the conclusion of the next annual general meeting

The auditor appointed in a casual vacancy shall hold office till the conclusion of the next annual general meeting. If a casual vacancy arises, the remaining auditors if any, will continue to Act.

Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 November 2009

Also read the following:

CASUAL VACANCY [Section 224(6)]

Meaning of casual vacancy in the office of auditor(s)

The expression 'casual vacancy' has not been defined in the Companies Act, 1956. Simply stated, a casual vacancy in the office of an auditor means a vacancy caused in the office of an auditor by his death, disqualification, resignation, etc. It has been held in the case of the Institute of Chartered Accountants of India v Jnanendranath Saikia (1955) 25 Comp Cas 53, 56 (Assam) that casual vacancy is not a vacancy created by any deliberate omission on the part of the company to appoint an auditor at its annual general meeting.

Section 224(6) governs this aspect and relevant provisions are stated hereunder:—

(a) The Board may fill any casual vacancy in the office of an auditor, but while any such vacancy continues, the remaining auditor or auditors, if any, may act.

(b) If any casual vacancy in the office of an auditor is caused by the resignation of an auditor, such vacancy shall only be filled by the company in general meeting.

Powers of the Board to fill up the casual vacancy only in case of death or disqualification of auditors

In terms of section 224(6)(a) where a casual vacancy arises in the auditors appointed by a company due to death or disqualification, the Board of directors may appoint another auditor.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 14 November 2009

Dear Preety,

In case of any casual vacancy in the office of Statutory Auditors by way of resignation, such vacancy can only be filled by the Company in General Meeting.

Any such auditor appointed in a casual vacancy shall hold office until the conclusion of the next Annual General Meeting.

Preety (Company Secretary) (96 Points)
Replied 14 November 2009

Thanks Mr Ankur.

Pl also tell me whther there is ony other requirement apart from cenvening EGm , in case of listedCompany. What all compliances are reqd in this case.

Regards

Preety

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 16 November 2009

Hold BM to decide the date of EGM and agenda.

After BM Intimate STX about the date of EGM and send at least 6 printed copy of EGM notice to STX. Also print EGM notice in the newspaper read with section 53.

After EGM send EGM proceedings to STX.

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Preety (Company Secretary) (96 Points)
Replied 16 November 2009

Thank u Mr Ankur for reverting back.

Pl tell me under which clause of Listing Ag.,we have to publish Notic of EGM in newspaper.

Regards

Preety

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 19 November 2009

Publishing of the notice of AGM or EGM is not necessary under Listing Agreement. However, notice is published pursuant to section 53 of Companies Act, 1956

Preety (Company Secretary) (96 Points)
Replied 08 April 2010

Hello friends

Mine is listed Co. Due to amme. in cl 41 of L Agre. which require appt of auditor having Peer Review should only be appted. Our Present auditor has refused to get peer review done. So we have to appt other auditor now. Can u pl tell me what is the procedure under Co Act and under Listing Agreeent along with resolution to be passed in Audit Committe, Board and EGM . Thanks in advance.

Regards

Preety