AN AUDITOR CAN BE REMOVED WITHOUT APPROVAL
FROM CENTRAL GOVT UNDER NEW COMPANY LAW : BY CA NITESH MORE
It is generally
said by every expert that an auditor will be removed under new company Law only
after obtaining previous approval of central Govt. Sec 140(1) confirms this.
However, I think that an auditor can be removed under new company Law without obtaining
previous approval of central Govt also .
A) The auditor can be
removed under sec 140(1) with previous approval of CG
B) The auditor can also
be removed under sec 139(9) without approval of CG
v The auditor appointed under
section 139 may be removed from his
office before the expiry of his term
only by a special resolution of the company, v Previous approval of the Central Government must be taken before removal.
v Before taking any action, the auditor concerned shall be given a reasonable opportunity of being heard.
Example: PWC is an auditor of Reliance Ltd. Company wants to remove PWC in December, 2018. Company has to obtain previous approval of CG &also has to follow other procedures prescribed u/s 140(1).
B) Reappointment of retiring auditor at AGM [Sec 139(9)]: A retiring auditor may be re-appointed at an annual general meeting, if
v he is not disqualified for
re-appointment;
v he has not given the company a notice in
writing of his unwillingness to be re-appointed; and
v a special resolution has not been passed at
that meeting appointing some other auditor or providing expressly that he
shall not be re-appointed.
Example: PWC is appointed as an auditor of Reliance Ltd in AGM of Sep 2016
for 5 years. Company in AGM of Sep 2018 appointed E& Y as auditor by
passing a special resolution.
Can PWC continue as auditor of
company?
Answer: As per sec 139(9), A retiring auditor may be re-appointed at an annual general meeting, if a special resolution has not been passed at that meeting appointing some other auditor. In the above case, as special resolution has been passed appointing E& Y as auditor, hence, PWC cannot continue.
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