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Appointment of auditor

Pawan Mittal (CA Final) (702 Points)

18 July 2012

An auditor is appointed in the Annual General Meeting of X Ltd. but the auditor refuses to accept the letter of appointment. Now what is the procedure to appoint another person to appoint as auditor of the company?

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4 Replies

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 18 July 2012

At an AGM the auditor is validly appointed but the auditor refuses to accept the assignment. In such a case who should fill this vacancy?

1. According to Department of company affairs/Ministry of corporate affairs the CG must appoint the auditors and fill the vacancy

2. According to the council for the research committee of ICAI this is a peculiar vacancy. This cannot be filled by CG, C&AG etc. Therefore this vacancy can only be filled by shareholders at an EGM.

This matter needs to be resolved.

Conclusion

Only members can appoint another auditor in a GM because:

a. Board can appoint as auditor only in the two cases namely first auditor and filling up of a casual vacancy other than resignation

b. CG has the power to appoint an auditor only if the company fails to appoint an auditor in an AGM or the appointment made in AGM is defective

CA MOHAMMED IRFAN (Chartered Accountant) (136 Points)
Replied 18 July 2012

Where the auditor appointed in an AGM refuse to accept the appointment, it cannot be said that the appointment is complete and effective. In such a case no valid appointment has been made in the AGM..ie, members failed to apoint auditors of the company.

It would be wrong to say that the refusal to accept the appointment results in a casual vacancy which can be filled by the Board. Since no appointment has been made in the AGM, the auditors shall be appointed by the Central Government. The shareholders have no paower to appoint the new auditors or to autorise the Board of Directors to appoint the new auditors.

somya (ca ) (172 Points)
Replied 18 July 2012

Since the auditor has refused to accept the appointment, it would be considered as no appointment of auditor has been made in the agm. Now the company shall give notice of the fact, to the central government within 7 days of the conclusion of the agm and this vacancy shall be filled by the central government.

RAHUL MAHAJAN (CA) (166 Points)
Replied 18 July 2012

Originally posted by : somya
	Since the auditor has refused to accept the appointment, it would be considered as no appointment of auditor has been made in the agm. Now the company shall give notice of the fact, to the central government within 7 days of the conclusion of the agm and this vacancy shall be filled by the central government.