APPOINTMENT OF AUDITOR IN CASE OF CASUAL VACANCY

Casual vacancy of Auditor means non appointment of Auditor at annual general meeting of the company. Casual Vacancy is governed by Sub Section 8 of Section 139 of Companies Act, 2013. So this situation may occur broadly due to two major reasons.

  1. Resignation by the Auditor
  2. Reason other than resignation by the Auditor

In both the situation appointment of new Auditor is required. Procedure to fill the vacancy in both the cases is different which is elaborated below.

So before forwarding towards procedure one must identify the reason for such vacancy i.e. vacancy due to resignation or not.

CASUAL VACANCY

CASE A: CASUAL VACANCY DUE TO RESIGNATION BY THE AUDITOR

Step 1Identify new Auditors on place of previous Auditor.
Step 2Send a letter to Proposed Auditor regarding their appointment.
Step 3Receive Eligibility & Consent Certificate from the New Auditor.
Step 4Call & Hold Board Meeting.
Step 5 Pass resolution for Appointment of New Auditor
Step 6 Submit E – Form ADT 1 within 15 days of appointment of new Auditor in Board Meeting.

OTHER FACTORS IN CASE A

Time PeriodWithin 30 days of Vacancy.
Term of AppointmentUp to Next AGM
MGT – 14No need to file MGT – 14
Circular ResolutionCircular resolution is enough to appoint Auditor.

 

CASE B: CASUAL VACANCY DUE TO REASON OTHER THAN RESIGNATION BY THE AUDITOR

Step 1Identify new Auditors on place of previous Auditor.
Step 2Send a letter to Proposed Auditor regarding their appointment.
Step 3Receive Eligibility & Consent Certificate from the New Auditor.
Step 4Call & Hold Board Meeting.
Step 5 Pass resolution for Appointment of New Auditor
Step 6Issue Notice of EGM (Extra ordinary General Meeting)
Step 7Pass Ordinary Resolution
Step 8Submit E – Form ADT 1 within 15 days of appointment of new Auditor in EGM.

OTHER FACTORS IN CASE B

Time PeriodWithin 30 days of Vacancy.
Time for EGMShareholder must approve new Auditor in EGM within 90 days of appointment.
Term of AppointmentUp to Next AGM
MGT – 14No need to file MGT – 14
Circular ResolutionCircular resolution is enough to appoint Auditor.

 

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