Auditor appointment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2015 Sir

The auditor of the company resigned just 15 days before agm. The Board appointed the other auditor. Now it seek confirmation in agm. My query is whether it will be special business or ordinary business (in Agm)to ratify board appointment.Also please sent format of such resolution

Amol S Joglekar

Amol S Joglekar (Expert)
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29 September 2015 AGM has every right to appoint AUDITOR.

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2015 Sir my query is whether in notice in this case it will be ordinary business or special business and whether explanatory statement will b attached

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2015 Sir my query is whether in notice in this case it will be ordinary business or special business and whether explanatory statement will b attached

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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15 July 2024 In the scenario you've described where the auditor resigned just 15 days before the AGM and the Board appointed a new auditor, here's how it typically works under the Companies Act, 2013:

### Business in AGM - Ordinary or Special?

1. **Ratification of Auditor's Appointment**:
- When a new auditor is appointed by the Board to fill a casual vacancy (in this case, due to resignation shortly before the AGM), the appointment needs to be ratified by the shareholders in the AGM.
- According to Section 139(1) of the Companies Act, 2013, the shareholders need to ratify the appointment of the auditor at every AGM.

2. **Classification of Business**:
- **Ordinary Business**: The ratification of the auditor's appointment is considered ordinary business at the AGM. Ordinary business includes items like adoption of financial statements, declaration of dividends, and appointment/reappointment of auditors.
- Therefore, ratifying the appointment of the auditor in this scenario would fall under ordinary business.

3. **Explanatory Statement**:
- Yes, an explanatory statement should accompany the notice of the AGM. The explanatory statement should provide details regarding the appointment of the new auditor by the Board, the reasons for the resignation of the previous auditor, and the qualifications and experience of the proposed auditor.

### Format of Resolution for Ratification:

The resolution for ratifying the appointment of the auditor can be structured as follows:

```
RESOLVED THAT pursuant to the provisions of Section 139 of the Companies Act, 2013, read with rules made thereunder, and based on the recommendation of the Audit Committee, the appointment of M/s [Name of New Auditor], Chartered Accountants (Firm Registration No. ________), as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting (AGM) until the conclusion of the next AGM, be and is hereby approved and ratified.

FURTHER RESOLVED THAT Mr./Ms. [Name of Director], Director of the Company, be and is hereby authorized to take all such steps and actions as may be necessary, proper or expedient to give effect to this resolution.

```

### Additional Considerations:

- Ensure compliance with any specific provisions of your company's Articles of Association regarding the appointment and ratification of auditors.
- The explanatory statement should include sufficient information to enable shareholders to understand the implications of the appointment.
- Follow the format and wording as per your company's practices and legal requirements, consulting with legal and accounting professionals if necessary.

By treating the ratification of the auditor's appointment as ordinary business and providing a clear explanatory statement, you ensure transparency and compliance with corporate governance norms under the Companies Act, 2013.

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