Auditor refuses acceptance of appointment

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Dipjyoti Majumdar

CA in service & CS. dipmaj@

2877 Points Posted on 11 October 2012

The members of the company in AGM reappointed the retiring auditor. When the Company informed the auditor about this within 7 days of AGM, the auditor refused to accept the reappointment.

Kindly advise course of action by the Company. I guess, the only option is to call an EGM.

Regards,

Replies (4)

T S D

171 Points Posted on 11 October 2012

I agree with you.

Section 224(3) of the Companies Act,1956, empowers the Central Government to fill up a vacancy in case no auditors are appointed or re-appointed at an annual general meeting (AGM).

It is also opined that the appointment of an auditor having been made by shareholders, sub-section (3)

cannot be invoked. Thus the auditor could only be appointed by shareholders at general meeting.

Source : ICAI Study material.

ACS Deepika Chowdhary

Company Secretary

149 Points Posted on 11 October 2012

As far as I know and my experience, we always obtain a letter from auditors regarding their eligibility and their willingness to be reappointed, which is not only a practice but prescribed as per companies act as well so this problem never arises. However, it is recommended for future practice. And for your query yes, you would have to hold egm now.

Thanks & Regards

Aditya Soni

CS Final Student Trainee

467 Points Posted on 11 October 2012

Agree with Deepika,

letter of interest in which Auditor confirms his eligibility and willingness to be reappointed is obtained, hense this question does not arise.

Regards,

Aditya

eligibility and their willingness to be reappointed

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Guest

Posted on 12 October 2012

friends,

plz refer page no.377,Munish bhandari sir"s book.

FOR ur reference,

When the auditor appointed in a AGM refuses to accept the appointment,it cannot be said that the appointment is complete and effective. In such case no valid appointment is made in the AGM.THUS ,it would be wrong to say that refusal to accept appointment results in casual vacancy which can be filled by board. Since no appointment of auditors has been made in the AGM,the auditors shall be appointed BY CG.THe shareholders have no power to appoint the new auditors or to authorise the BOARd to appoint the new auditor.