Remuneration of Auditor

This query is : Resolved

Mohit Singla (Querist)
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28 August 2016 As per section 142, remuneration shall be fixed by company in GM and in case of 1st auditor by BOD. now my query is 'in case of casual vacancy who will fix the remuneration?' because appointment is made by BOD but after appointment of auditor as per section 139(8) of the company..their is no requirement of conducting any EGM where members can fix the remuneration and BOD can fix remuneration of 1st auditor only as provided in section 142 what will be the answer to above query..please give your views

CA Amar Kumar

CA Amar Kumar (Expert)
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28 August 2016 In case of a casual vacancy, the appointment is made by BOD/CAG but such appointment is also required to be approved at a general meeting to be called within 3 months of the recommendation made by BOD. So, at GM the company can approve the remuneration set by BOD.

CA Amar Kumar

CA Amar Kumar (Expert)
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28 August 2016 I'm keeping the query open so that we get a nice discussion and hear about other views as well.

Mohit Singla

Mohit Singla (Querist)
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28 August 2016 Dear Amar Kumar, thanks for your response. as per your answer this would apply only in the case where auditor himself resigns from the company(BOD approval with EGM approval both required). But what we do in other cases? May be I would be wrong but as per me in the absence of specific provision in the act 'company should conduct a EGM for this matter' or may be BOD can do so...

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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21 July 2025 This is a very practical and often debated issue regarding remuneration of auditors appointed to fill a casual vacancy under the Companies Act.

Key points to consider:
Section 139(8) states that when a casual vacancy arises in the office of auditor, the Board of Directors (BOD) appoints an auditor within 30 days.

This appointment must be approved by the members in a general meeting (GM) convened within 3 months of the BOD's recommendation.

Section 142(1) states that the remuneration of auditors shall be fixed by the company in the general meeting, except for the first auditor whose remuneration is fixed by the BOD.

So, in the case of a casual vacancy:
The BOD appoints the auditor temporarily.

The remuneration is initially decided by the BOD at the time of appointment (practically speaking, to avoid delay).

However, since the appointment is subject to approval by members at the GM, the remuneration also requires approval at that GM.

Your query: What if there is no specific provision for fixing remuneration in casual vacancy cases other than resignation?
Practical and safest approach: The BOD fixes remuneration temporarily, and then the remuneration must be ratified/approved by members at the GM called to approve the appointment.

If the GM does not approve, then remuneration may be reconsidered.

If no GM is called, this creates a procedural gap — but since Section 139(8) mandates approval by members, the GM must be held within 3 months anyway, where remuneration can be fixed or ratified.

Summary:
Scenario Appointment by Remuneration fixed by Approval required from
First auditor BOD BOD None
Casual vacancy (e.g. resignation) BOD temporarily BOD temporarily (provisional) Members in GM within 3 months
Regular auditor appointment Members in GM Members in GM Members in GM

In your case, if there is a casual vacancy other than resignation:
The BOD appoints the auditor temporarily.

The company must convene a GM within 3 months for approval.

The remuneration fixed by the BOD should be approved or fixed at this GM.

No remuneration fixing can happen only by the BOD without member approval beyond this temporary period.

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