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Appointment of auditor

Pawan Mittal (CA Final) (711 Points)

11 August 2012

A private company appointed Mr. X as their auditor in A.G.M. But Mr. X refused to accept the letter of appoinment. Now what is the proceudure to appoint Mr. Y as the auditor of company?

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9 Replies

Mukund (CA Final (New) Group One Cleared) (177 Points)
Replied 11 August 2012

If the auditor refuses to accept the appointment, then it amounts to non appointment of auditor by the company in AGM. Here, Central Government's power to appoint auditor comes into picture. The company has to file Form 24A with the Regional Director. The company has to intimate the fact of rejection of appointment by the auditor and the power of CG to appoint auditor within 7 days. If the co doesnt inform, then the company and every officer is punishable with a fine which may extend upto Rs. 5000/-.

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Pawan Mittal (CA Final) (711 Points)
Replied 18 August 2012

Thanx Mukund. Can u please tell me a reliable source of this answer. i.e. section of companies Act in which this is written clearly.

Megha Masta (CS (final)) (53 Points)
Replied 18 August 2012

if auditor refuses to accept the appointment at the AGM, it means non appointment of auditors by the company, Section 225 of companies act 1956 provides that special notice shall be require for a resolution at an AGM appointing as auditors a person other than a retiring auditors or providing expressly that retiring auditor shall not be re-appointed.

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Mukund (CA Final (New) Group One Cleared) (177 Points)
Replied 18 August 2012

Miss Megha.. Kindly peruse the question carefully. AGM in this case is already over.

Mukund (CA Final (New) Group One Cleared) (177 Points)
Replied 18 August 2012

Dear Pawan: Kindly refer Section 224(3) of Companies Act, 1956.

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Pawan Mittal (CA Final) (711 Points)
Replied 18 August 2012

Mukund I have already gone through section 224(3) of companies Act. But in section 224(3) it is written that "When no auditor is appointed in an AGM, than Central Govt. has the power to appoint the auditor. In my case shareholders have already appointed the auditor and the auditor has refused to accept the appointmet.

So Miss Megha is not wrong as far as I think. This is a matter of dispute.

gattoch (legal practitioner) (26 Points)
Replied 18 August 2012

Hello, I need someone to please help me with a sample object clause for a music entertainment company and music artist management company. I would really appreciate it.

Megha Masta (CS (final)) (53 Points)
Replied 18 August 2012

if auditor refusing to accept the appointment, there are two condition unwillingness or resignation in both conditions auditor will give his non acceptance in writing to the company. then company will convene the board meeting in which Mr. Y will be appoint as an auditor of the company but subject to approval of general meeting. otherwise auditors will be appoint by Central govt.