Ours is a Private Company subsidiary of a listed Public Company.
The First auditors of the Company were appointed by the BOD within 1 month from the date of incorporation.
As per the provision of section 224(5) of the Companies Act, 1956, such first auditor shall hold office upto the first Annual General Meeting of the Company. Now the Company wants to appoint some other auditor in place of the first auditor.
What is the procedure to be followed in this case.?
No special procedure required in your case.
Simply consider the name of new auditor in the board meeting. After finalizing the name of new auditor put the same in AGM calling notice as an agenda item for shareholders approval.
In the AGM pass the necessary resolution for appointment of new auditor.
Casual vacancy is caused due to death, resignation or disqualification of auditors. In case of resignation of auditors, the vacancy needs to be filled only through General Meeting.
• Section 224(6) (a) provides that the Board may fill any casual vacancy in the office of an auditor; but while any such vacancy continues, the remaining auditor or auditors, if any, may act:
• Provided where such vacancy is caused by the resignation of an auditor, the vacancy shall only be filled by the company in general meeting.
• (b) Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting.
The Company must receive a Special Notice from a member/shareholder not less than 14 days before the ensuing A.G.M. indicating his intention to move a resolution for changing the existing Auditor of the Company and for appointing another Auditor in his place.
The Company must send forthwith a copy of such notice to the existing auditor of the Company.
A certificate in writing should be obtained from the proposed new Auditor to the effect that his appointment, if made, will be in accordance with the limits as specified in Sec. 224(1B).
The Company must issue notice in writing at least 21 days before the date of A.G.M. stating about the Special Notice received and proposing the ordinary resolution for change of the Auditor along with Explanatory statement.
The retiring Auditor has a right to make representation either in writing to the Company or orally at the A.G.M. If the representation is received from the Auditor the same should be enclosed along with notice. If the representation could not be sent along with the notice for being received late, it should be sent later at any time, being reasonable time, but before the A.G.M.
In case it is not possible to send special notice and representation in the notices of the A.G.M., then the Company should inform the shareholders by advertisement in newspaper having appropriate circulation or by any other mode as allowed by the Articles of Association not less than 7 days before such A.G.M.
However, if a copy of such representation by the retiring auditor is not possible to be sent as aforesaid, because they were received too late or because of the default of the Company, such written representation shall be read out at the meeting. This is without prejudice to the right of the Auditor to be heard orally in the A.G.M. But in certain circumstances the Company Law Board can exempt the Company from sending or reading out such representation of the retiring Auditor on the application either of the Company or of any of the persons, who claims to be aggrieved.
Three copies of such notices to be forwarded to the Stock Exchange, where such shares of the Company are listed.
The Company should then hold a General Meeting and pass a Resolution.
Only after such Resolution is passed in the A.G.M. the new Auditor shall be considered as duly appointed in place of the Retiring Auditor.
The new Auditor should inform the concerned Registrar of Companies in Form No. 23B about his accepting the appointment within one month from the receipt of Intimation of his appointment from the Company.
ONLY THE PROVISIONS OF PROVISO TO SUB-SECTION 1B OF SECTION 224 DOES NOT APPLY TO A PRIVATE COMPANY OTHERS DO.
Dilip jee
your reply is not matching my query...please read my query once again
Regards
Thanks a lot Parashar
This is not a case of casual vacancy...u/s 224(6).
Parashar
Can you send me the format of special notice
AS PER SECTION 225 OF COMPNAIES ACT 1956 FIRST AUDITOR CAN BE ROMOVED WITHOUT INTIMATION TO HIM. ,HOWEVER BOARD OF DIRECTOR MAY REMOVED FIRST AUDITOR WITHOUT ANY REPRESTATION LETTER TO HIM . AND FIRST AUDITOR HAVE NOT RIGHT TO APPEARED BEFORE AGM. BUT SUBSQUENT AUDITOR MAY APPOINT EITHER BY BOARD OR BY MEMBER IN GM AND SUCH AUDITOR SHALL BE HOLD OFFICE TILL CONCLUSION OF NEXT AGM.
But is the provisions of section 225 of Companies Act 1956 applicable to First Auditor?
I mean will the first audito be covered under th term reiring auditor.?
This may be useful for you:
SPECIAL NOTICE
To
The Managing Director
………….Pvt. Ltd.
………………………..
Dear Sir,
Pursuant to Section 224(5) of the Companies Act, 1956, I hereby give special notice proposing the following resolution as an ordinary resolution at the next Annual General Meeting of the Company:
“RESOLVED THAT M/s……………………..Chartered Accountants be and are hereby appointed Auditors of the Company in place of the retiring auditors, M/s………….to hold office until the conclusion of the next Annual General Meeting at a remuneration of Rs…………………….”
Place………………. Yours faithfully,
Date…………….. (Sd/-) Member
make your settings in format.
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