Casual vacancy can be occurred in the office of the auditors due to various reasons such as death, resignation of auditor etc. Section 139 of the Companies Act, 2013 speaks about the appointment of auditors in a company including filling of casual vacancy in the office of an auditor.
Section 139(8) of the Companies Act, 2013 reads as below-
“ (8) Any casual vacancy in the office of an auditor shall-
(i) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor- General of India, be filled by the Board of Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting;
(ii) in the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within thirty days:
Provided that in case the Comptroller and Auditor-General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next thirty days.“
As per section 139(11) of the Companies Act, 2013, where a company is required to constitute an Audit Committee, all appointments, including the filling of a casual vacancy of an auditor shall be made after taking into account the recommendations of such committee.
The new auditor appointed as such shall hold the office till the conclusion of the next annual general meeting of the company.
In this article, we will discuss about the filling of casual vacancy in the office of an auditor, where such vacancy is as a result of resignation of the auditor.
FILLING OF CASUAL VACANCY ARISING DUE TO RESIGNATION OF AN AUDITOR
In case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India:-
- In the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, casual vacancy shall be filled by the Comptroller and Auditor-General of India within 30 days.
- In case the Comptroller and Auditor-General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next 30 days.
In the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor- General of India:-
- Such casual vacancy shall be filled by the Board of Directors within 30 days.
- Such appointment shall also be approved by the company at a general meeting convened within 3 months of the recommendation of the Board.
Procedure for filling the casual vacancy arising due to resignation of an auditor in a company other than a company whose accounts are subject to audit by an auditor appointed by the CAG-
1
Give proposal to the proposed auditor for appointment as Auditors of the company
2
Obtain written consent/ certificate from the proposed auditor about the eligibility as per sections 139, 141 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014.
3
Hold audit committee meeting to recommend to the Board the name of an individual or firm as an auditor to fill the casual vacancy in the office of the auditors.
4
Issue not less than 7 days’ notice along with agenda and notes on agenda to every director of the company at his address registered with the company. A meeting of the Board may be called at shorter notice to transact urgent business subject to fulfilment of certain condition(s).
5
Hold a board meeting –
A. Where a company is required to constitute an Audit Committee
a) To consider the recommendation of the audit committee.
b) To pass a resolution to fill the casual vacancy, subject to the approval of the shareholders in a general meeting.
c) To call a general meeting within a period of 3 months to obtain the approval of the members.
B. Where a company is not required to constitute an Audit Committee
a) To pass a resolution to appoint an auditor to fill the casual vacancy, subject to the approval of the shareholders in a general meeting.
b) To call a general meeting within a period of 3 months to obtain the approval of the members.
6
Issue notice calling general meeting along with the explanatory statement u/s 102 at least 21 clear days in advance of the general meeting to all the members, directors, auditors, debenture trustee, secretarial auditors of the company and any other person entitled to it.
An EOGM may be called after giving shorter notice, if consent, in writing or by electronic mode, is accorded thereto, by majority in number of members entitled to vote and who represent not less than 95%, of such part of the paid-up share capital of the company as gives a right to vote at the meeting.
7
Hold the general meeting and pass an ordinary resolution for the appointment of the auditor.
8
Communicate with the new auditor about his appointment.
9
File e Form ADT -1 within 15 days from the date of the general meeting.
Attachment:
- Copy of intimation to the Auditor
- Certified true copy of the ordinary resolution
- Consent/certificate given by the auditor
- Optional attachment, if any.
Also Read General Meeting Resolution for Appointment of Auditor to Fill the Casual Vacancy Caused by Resignation in Case of Company other than Government Company