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Can auditors be appointed in agm in case of resignation

Khushboo Maheshwari (Company Secretary) (548 Points)

18 September 2013

My query is that statutory auditor of a company have resigned in August 2013 and in September it is proposed to hold the AGM of the Company, so can the new auditors be appointed in AGM itself Or there should be an EGM called for appointing them first? Awaiting a prompt reply. Thanks in advance

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10 Replies

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 18 September 2013

according to section 224 (6)

(a) 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 that 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.

and hence refering to the above section casual vecancy arised by a way of resignation should be filled only by EGM therefore before the AGM company should call for a GM and appoint an auditor and also his tenure wil be up to next AGM (in your case upto september)

Ajay Mishra (Company Secretary) (74342 Points)
Replied 18 September 2013

General meeting includes Anual general Meeting. So you can appoint a new auditor in AGM.

In that case section 225 is not applicable.

1 Like

(Guest)

Dear Khushboo,

Agree with Ajayji, you can appoint directly in AGM.

Regards

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Khushboo Maheshwari (Company Secretary) (548 Points)
Replied 18 September 2013

Thanks a lot Neha and Ajay

Had been waiting to read that they can be appointed in AGM

Thanks again...

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CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 18 September 2013

but according to the rules in the AGM

the board should accept the audited balance sheet and secondly appoint /reappoint the auditor on completion of tenure

and also before sending the notice of the AGM the audited balace should be ready

on considering this without the appointment of before the AGM you cannot hold the AGM as there no audited balance sheet on the date even the notice

so it is mandatory to conduct a EGM and appoint an auditor.

this is the technical point I belive

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prakash jhalaria (Practicing Chartered Accountant) (22 Points)
Replied 19 September 2013

I also agree with dhruva

Ajay Mishra (Company Secretary) (74342 Points)
Replied 19 September 2013

Dear Dhruva and Prakash......

Where it is mentioned that the person who have audited balance sheet and which balance sheet is adopted by Board will regine then you can not appoint another auditor in AGM.

Few Points should be kept in Mind about auditor:

1. The auditor is appointed for auditing of comany account for the Financial Year and he hold office till AGM.

2. After signing of Balance sheet for the FY for which he has given their resignation will be quite OK.

3. After the end of FY the appointed auditor will only sign documents which are related with that FY.

4. In the above case, it is a very good that such auditor has given their resignation after signing of BS.

5. If he has not signed the Balance sheet, then you will call an EGM and appoint auditor for the FY for which such old auditor has resign.

6. So, if he has signed the Balance Sheet then no need to call an EGM for appointment of an other auditor. You can wait till AGM for appointing new Auditor.

Regards

3 Like

Hemanshu Rohitkumar Bakshi (Credit Controller) (197 Points)
Replied 19 September 2013

Thanks Mr. Mishra for clarfication

Paidi Sujith Reddy (Final) (35 Points)
Replied 19 September 2013

I agree with ajay..

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 19 September 2013

Yes i also agree with ajay

if there is audited balance sheet and an audit report well before the auditor resignation then they need not conduct the EGM and they can directly appoint in the AGM

as there s no timelimit specified in the Act to fill the casual vacancy