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REASONS FOR CASUAL VACANCY:

There are two reasons of Casual Vacancy of Auditor:

I. Casual Vacancy due to reason other than Resignation of Auditor.

II. Casual Vacancy because of Resignation of Auditor



Section

Sub section 8 of Section 139

Rule

There is no rule for Casual Vacancy of Auditor.

Non-Ratification of Auditor by Shareholders in Annual General Meeting also considered as Casual Vacancy other than resignation of Auditor.

Forms

In case of Casual Vacancy for reason other than RESIGNATION, no need to file ADT-3.

Circular Resolution

In both situation Board of Directors can appoint auditor by passing of “RESOLUTION BY CIRCULATION”

Secretarial Standard

Follow the provisions of Secretarial Standard 1 & 2 while conducting Board Meeting and General Meeting.


I. Lets Discuss the Provision and Process for Appointment of Auditor in case of “Casual Vacancy due to reason other than Resignation of Auditor”:

If a Casual Vacancy arises due to casual vacancy other then resignation then Board of Directors of Company has the power to appoint Auditor.

PROVISIONS:

Time Period: BOD of Company within 30 days of arisen of Casual Vacancy appoint a Statutory Auditor on place of old Auditor.

Term of Appointment: Such Auditor will become auditor of the Company upto ensuing Annual General Meeting. He is liable to retire or may be re-appoint on ensuing AGM.

Form Filing: BOD will file ADT-1 within 15 days of appointment of Auditor.

Circular Resolution: Circular Resolution passed by Board Resolution is enough for appointment of auditor in case of casual vacancy.

Filing of MGT-14: No need to file e-form MGT-14 in case of appointment of Auditor.

PROCEDURE FOR APPOINTMENT:

• Find out new auditor on place of earlier.
• Issue of intimation letter to proposed auditor by the Company.
• Obtaining of Consent and Eligibility certificate from the Auditor
• Call Board Meeting after receipt of Certificates from the auditor.
• Hold the Board Meeting and pass Board Resolution for appointment of auditor
• File e-form ADT-1 within 15 days of passing of Board Resolution.

Note: 

It is not mandatory for the Company to hold the Board Meeting for appointment of Auditor. Auditor can be appoint by passing of “CIRCULAR RESOLUTION”.

II. Lets Discuss the Provision and Process for Appointment of Auditor in case of “Casual Vacancy arise due to Resignation of Auditor”:

If a Casual Vacancy arises due to resignation of auditor then new auditor will be appoint by Board of Director but such appointment shall be approve by the Shareholder in their Extra-Ordinary General Meeting.

PROVISIONS:

Time Period: BOD of Company within 30 days of arisen of Casual Vacancy appoint a Statutory Auditor on place of old Auditor.

Extra Ordinary General Meeting: Such appointment must be approved by the shareholders in their Extra- Ordinary General Meeting within 90 days of appointment of such auditor.

Term of Appointment: Such Auditor will become auditor of the Company upto ensuing Annual General Meeting. He is liable to retire or may be re-appoint on ensuing AGM.

Ordinary Resolution: Such appointment shall be approve by passing of “ORDINARY RESOLUTION” in General Meeting.

Form Filing: BOD will file ADT-1 within 15 days of appointment of Auditor in Extra Ordinary General Meeting.

Circular Resolution: Circular Resolution passed by Board Resolution is enough for appointment of auditor in case of casual vacancy.

Filing of MGT-14: No need to file e-form MGT-14 in case of appointment of Auditor.

PROCEDURE BY COMPANY:

Appointment:

• Find out new auditor on place of Retiring Auditor.
• Issue of intimation letter to proposed auditor by the Company.
• Obtaining of Consent and Eligibility certificate from the Auditor
• Call Board Meeting after receipt of Certificates from the auditor.
• Hold the Board Meeting and pass Board Resolution for appointment of auditor
• Issue notice of Extra-ordinary General Meeting within 90 days of appointment by Board of Directors.
• Hold the General Meeting and pass Ordinary Resolution.
• File e-form ADT-1 within 15 days of passing of Ordinary Resolution in General Meeting.

Resignation: {Section 140(2)}

• Resigning Auditor will send letter of his resignation mentioning the reason of resignation to Company within 30 days of Resignation.
• Resigning auditor will file e-form ADT-3 along with detailed resignation letter with ROC within 30 days of his resignation.

DRAFT RESOLUTION:

SPECIAL BUSINESS:

Appointment of Statutory Auditors to fill casual vacancy

To consider and, if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution:

Resolved that pursuant to the provisions of Section 139(8) and other applicable provisions, if any, of the Companies Act, 2013 as amended from time to time or any other law for the time being in force (including any statutory modification or amendment thereto or re-enactment thereof for the time being in force), M/s. -------., Chartered Accountants, New Delhi be and are hereby appointed as Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of ------------------., Chartered Accountants, ------------.

Resolved further that M/s. -------------------., Chartered Accountants, New Delhi be and are hereby appointed as Statutory Auditors of the Company from this Extraordinary General Meeting and that they shall hold the office of the Statutory Auditors of the Company from the conclusion of this meeting until the conclusion of the ensuing Annual General Meeting and that they shall conduct the Statutory Audit for the period ended 31st March, 2015 on such remuneration as may be fixed by the Board of Directors in consultation with them.”

Explanatory Statement under Section 102(1) of the Companies Act, 2013:

M/s. -----------., Chartered Accountants, Ludhiana have tendered their resignation from the position of Statutory Auditors due to unavoidable circumstances, resulting into a casual vacancy in the office of Statutory Auditors of the company as envisaged by section 139(8) of the Companies Act, 2013 (“Act”). Casual vacancy caused by the resignation of auditors can only be filled up by the Company in general meeting. Board proposes that M/s. -------------------., Chartered Accountants, New Delhi, be appointed as the Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of M----------., Chartered Accountants. M/s. ---------., Chartered Accountants, New Delhi, have conveyed their consent to be appointed as the Statutory Auditors of the Company along with a confirmation that, their appointment, if made by the members, would be within the limits prescribed under the Companies Act, 2013.

Accordingly, Ordinary Resolution is submitted to the meeting for the consideration and approval of members.

None of the Directors, Key Managerial Persons or their relatives, in any way, concerned or interested in the said resolution.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in  Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com

Disclaimer: The entire contents of this document have been prepared on the basis of  relevant provisions and as per the information existing at the time of the preparation. The  observations of the author are personal view and the authors do not take responsibility of the  same and this cannot be quoted before any authority without the written.


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Category Corporate Law, Other Articles by - CS Divesh Goyal 



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