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Auditors appointment related

karthickraj (Student CS) (127 Points)

01 April 2019

Hi Sir(s),

Anybody tell me the correct way:

Appointment of Statutory Auditors to a company who removing existing auditors and suppose to appoint new Auditors.

1. Whether the new appointment is the Casual Vacancy.

2. Can be a firm appointed as statutory auditors for a term of five years at EGM before the AGM.

Thanks & Regards

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4 Replies

Radhey Shyam Jha (Student) (1567 Points)
Replied 01 April 2019

It is difficult to remove an auditor before expiry of his term since adequate grounds must exist to prove that the auditor is unsuitable for continuing as an auditor.

The auditor appointed under section 139 may be removed from his office before the expiry of his term
●only by a special resolution
●after obtaining the previous approval of the CG
●by making an application in Form ADT-2

Thus, such stringent provisions provides that auditor cannot be removed at will by management or shareholders. Such provisions ensure independence of auditors.

Tenure of auditor is till the conclusion of upcoming AGM (in case of casual vacancy).

karthickraj (Student CS) (127 Points)
Replied 01 April 2019

Yes, order from CG has received by the company. After that how to appoint new auditors.

Whether can we appoint a new auditor at EGM for 5 years terms or by the board up to the ensuing AGM.

Radhey Shyam Jha (Student) (1567 Points)
Replied 01 April 2019

1. If auditor is removed from his office before expiry of his term is "Casual Vacany"

2. Any Auditor appointed in a casual vacancy shall hold office until the conclusion of the next (i.e. upcoming) AGM.

3. Therefore you can not appoint auditor for a term of 5 year.