Appointment of new auditors in egm: possibilities

Dear yashsir,

1. yes auditor can be appointed by egm.

2. yes ,

II. ORDINARY RESOLUTION PASSED AT THE EGM FOR REMOVING EXISTING AUDITORS SUBJECT TO APPROVAL OF REGIONAL DIRECTOR

“RESOLVED THAT pursuant to the provision of section 224(7) of the Companies Act, 1956 and subject to the approval of the Central Government (Powers delegated to the Regional Director), M/s ABC & Co., Chartered Accountants of Kanpur, who were appointed as the Auditors of the Company at the last Annual General Meeting to hold office up to the conclusion of the next Annual General Meeting of the Company, be and are hereby removed from such office of the Auditors, before the expiry of their term.”

III. ORDINARY RESOLUTION PASSED AT THE EGM FOR APPOINTING NEW AUDITORS SUBJECT TO APPROVAL OF REGIONAL DIRECTOR

“RESOLVED THAT pursuant to the provision of section 224, 224(1B) and 225 of the Companies Act, 1956 and subject to the approval of the Central Government (Powers delegated to the Regional Director) for the removal of the existing Auditors of the Company, M/s Jain & Co., Chartered Accountants of Mysore, M/s Malhotra & Associates, Chartered Accountants of Kanpur, be and are hereby appointed as the Auditors of the Company to hold office from the date of order of removal of the Auditors as approved by the Regional Director up to the conclusion of the next Annual General Meeting of the Company on a remuneration of Rs. 6,500 plus out of pocket expenses.

SPECIMEN OF THE BOARD RESOLUTION FOR AUTHORIZING TO FILE APPLICATION

“RESOLVED THAT an application in the prescribed e-Form 24A for approval for the removal of Auditor u/s 224(7) of the Companies Act, 1956 be made to the Regional Director, Ministry of Company Affairs, Western Region, Mumbai.

RESOLVED FURTHER THAT Mr. Manoj, Director and/or Company Secretary of the Company be and is hereby authorised to sign the application on behalf of the Board and execute an affidavit verifying the contents of the application.

RESOLVED FURTHER THAT Company Secretary be and is hereby authorised to file the above said application with the Regional Director, Western Region, Department of Company Affairs and to appear before the Regional Director on behalf of the Company and to do all such acts, deeds and things as may be required in the matter and to give all details, statements as may be required by the Regional Director.”

The resolution is proposed to give the necessary authority to the Board of Directors in this behalf. No director is interested or concerned in the resolution.

3. no, it can audit only financial year 201.-11 only.

regards,

Hello Mr.Yadav,

Thank you for your reply! However, I'm not clear on the following points:

2) You answered 'Yes'. Does that mean this prior approval is necessary? Or does it mean that since the auditor has given NOC, the prior approval is not required and everything is fine?

3) My question is if the auditor is appointed in July 2011, can he audit accounts for the financial year ended 31st March 2011?

Hi Yash,

No need to worry buddy as CG approval is not required.

A reading of proviso (a)  to section 224(5) suggest that the company may, at a general meeting (EGM), remove any such (First Auditor) auditor and appoint in his places any other person or persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than fourteen days before the date of the meeting

Reason for non-applicability of CG approval:

Here provisions of section 224(7) i.e. auditor removal with CG approval not applicable due to the language used in section 224(7). Removal of first auditor by shareholders in the EGM is outside the preview of section 224(7).

Further I think a new auditor can conduct a fresh audit of accounts for the FY 2010-11. There is no issue at all. All this is dependent on his mutual understanding with the company management.

Regards

You are always welcome. Keep sharing your doubts.

Regards

Dear Sir,

A Private limited company's director report is on 20/08/2011 and the AGM is held on 30/09/2011,  in director's report it is written that the auditor retire and offer themselve for reappointment.

But when AGM is held that auditor shows his unwillingness to appoint and the company appointed a new auditor in place of previous auditor.

Now before the next AGM i.e. 30/09/2012 the new auditor that was appointed resign and casual vacancy was created.

Pls let me knw formalities that we have to complied with and the flow of event occured from the inception are correct???

Thanks in advance and Regards

ACS Neeti Jindal

If company wants to remove the existing auditors and appoint new auditors in place of existing auditors other than annual general meeting, what is the procedure to follow and the resolutions to be passed in the Extraordinary General Meeting?

Pl. reply soon so that I can act accordingly.