Auditors not appointed for fy 12-13 in agm

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Rakesh Mishra (Querist)
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27 September 2013 Dear Experts,

Auditors are not appointed for a PVT. LTD. company.for FY 12-13 in AGM held for that FY.
This was the first AGM.and there is no auditors yet.

1.can company appoint new auditors now?

2.what is the procedure.

3.is Central Govt. approval required.

Ajay Mishra

Ajay Mishra (Expert)
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27 September 2013 Hi

Section 224(3) provides that if no auditors are appointed or re-appointed at an annual general meeting of a company, the Central Government may appoint a person to fill the vacancy. Therefore, the power of the Central Government to appoint auditors becomes exercisable when no auditors are appointed or reappointed at an annual general meeting of a company. The Company is required to give intimation electronically to the Regional Director (Powers of the Central Government were delegated to the Regional Director) vide Notification No. GSR 288(E) dated 31st May, 1991) in new e-Form 24A prescribed by Notification No. GSR 56(E) dated 10th Feb., 2006.

Obligation has been cast on the company that within seven days of the Central Government's power u/s 224(3) becoming exercisable, it shall give a notice of that fact to that Government; and if a company fails to give such notice, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.

Ajay Mishra

Ajay Mishra (Expert)
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27 September 2013
Further, omission or failure to pass a special resolution at an annual general meeting for appointment of an auditor under section 224A has under mentioned two consequences:—
(a) it shall be deemed that no auditor or auditors had been appointed by the company at its annual general meeting; and
(b) the power of the Central Government under section 224(3), to appoint auditors becomes exercisable.

Circular No. 5 of 1972, dated 21-2-1972 inter alia provides that the Government's power to appoint auditors under section 224(3) becomes available where at an annual general meeting no auditors are appointed or re-appointed. Where auditors are not appointed or re-appointed in accordance with the provisions of the Act including section 224(2), as read with sections 225 and 190, section 224(3) becomes attracted in the matter.

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