RE-APPOINTMENT/CASUAL
VACNAY OF AUDITOR OF AUDITOR
PROCESS TO APPOINTMENT
OF AUDITOR UNDER COMPANY ACT-
2013
CS DIVESH GOYAL,
Practicing Company Secretary
REAPPOINTMENT OF
RETIRING AUDITOR:-
Subject to the maximum tenure of appointment, a retiring
auditor can be re-appointed at an annual general
meeting [Sec- 139(9)] if—
ü
He is not
disqualified for re-appointment;
ü
He has not given the
company a notice in writing of his unwillingness to be re-appointed; and
ü
A special resolution
has not been passed at that meeting appointing some other auditor or providing
expressly that he shall not be re-appointed.
Where at any annual
general meeting, no auditor is appointed or re-appointed, the existing auditor
shall continue to be the auditor of the company.
Example: ABC is appointed as an
auditor of ------------ Ltd in AGM of Sep 2015 for 5 years. Company in AGM of
Sept 2018 appointed XYZ as auditor by passing a special resolution. Can ABC
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 XYZ as auditor, hence, ABC cannot
continue.
*RESOLUTION FOR APPOINTMENT OF AUDITOR:
*RESOLUTION FOR APPOINTMENT OF AUDITOR:
To consider, and if
thought fit, to pass with or without modification(s), the following resolution
as an Ordinary
Resolution:
‘RESOLVED THAT pursuant to the provisions of Section 139 and other
applicable provisions, if any, of the Companies Act, 2013, read with rules made
there under, M/s. ABC & Co., Chartered Accountants, (FRN No. -----------),
retiring auditor of the Company be and are hereby re-appointed as Statutory
Auditors of the Company, to hold office from the conclusion of Thirtieth (30th)
Annual General Meeting until the conclusion of the Thirty Fourth (34th) Annual
General Meeting of the Company, subject to ratification of the appointment by
the Members of the Company at every Annual General Meeting as per the
provisions of the Companies Act, 2013, at such remuneration plus service tax,
out-of-pocket, travelling and living expenses, etc., as may be mutually agreed
between the Board of Directors of the Company and the Auditors
EXPLANATORY STATEMENT:
Appointment of
Statutory Auditors of the Company - In terms of Section 139 (1) of the
Companies Act, 2013, every Company shall, at the first AGM, appoint an
individual or a firm as an auditor who shall hold office from the conclusion of
that meeting till the conclusion of its sixth Annual General Meeting and
thereafter till the conclusion of every sixth meeting. M/s. ABC, Chartered
Accountants Chartered Accountant who was appointed as Statutory Auditors of the
Company for the financial year i.e. 2013-14 hold the office upto the conclusion
of this Annual General Meeting. Thus, the appointment of Statutory Auditors for
a period of four consecutive years has been put up for the approval of members
at item no. -- of the Notice.
APPOINTMENT OF
AUDITOR WHEN RESIGNATION IS GIVEN BY EXISTING AUDITOR: This situation is called CASUAL VACANCY:
·
CV caused because of resignation : In case of Casual
vacancy because of resignation by auditor then appointment of auditor on his
place by BOD within 30 days but the
same should be approved by the company within 3 months of recommendation and
shall hold office till conclusion of next AGM
·
CV caused because of other reasons (disqualifications
as per 141) : By BOD within 30
days, No approval.
SPECIAL BUSINESS:
Appointment of
Statutory Auditors to fill casual vacancy
To consider and, if
thought fit, to pass, with or without modification(s), the following resolution
as an Ordinary Resolution:
“Resolved that pursuant to the provisions of Section 139(8) and
other applicable provisions, if any, of the Companies Act, 2013 as amended from
time to time or any other law for the time being in force (including any
statutory modification or amendment thereto or re-enactment thereof for the
time being in force), M/s. -------., Chartered Accountants, New Delhi be and
are hereby appointed as Statutory Auditors of the Company to fill the casual
vacancy caused by the resignation of ------------------., Chartered Accountants,
------------.
Resolved further that M/s.
-------------------., Chartered Accountants, New Delhi be and are hereby
appointed as Statutory Auditors of the Company from this Extraordinary General
Meeting and that they shall hold the office of the Statutory Auditors of the
Company from the conclusion of this meeting until the conclusion of the ensuing
Annual General Meeting and that they shall conduct the Statutory Audit for the
period ended 31st March, 2014 on such remuneration as may be fixed by the Board
of Directors in consultation with them.”
Explanatory Statement
under Section 102(1) of the Companies Act, 2013:
M/s. -----------.,
Chartered Accountants, Ludhiana have tendered their resignation from the
position of Statutory Auditors due to unavoidable circumstances, resulting into
a casual vacancy in the office of Statutory Auditors of the company as
envisaged by section 139(8) of the Companies Act, 2013 (“Act”). Casual vacancy
caused by the resignation of auditors can only be filled up by the Company in general
meeting. Board proposes that M/s. -------------------., Chartered Accountants,
New Delhi, be appointed as the Statutory Auditors of the Company to fill the
casual vacancy caused by the resignation of M----------., Chartered
Accountants. M/s. ---------., Chartered Accountants, New Delhi, have conveyed
their consent to be appointed as the Statutory Auditors of the Company along
with a confirmation that, their appointment, if made by the members, would be
within the limits prescribed under the Companies Act, 2013.
Accordingly, Ordinary
Resolution is submitted to the meeting for the consideration and approval of
members.
None of the
Directors, Key Managerial Persons or their relatives, in any way, concerned or
interested in the said resolution.
As per provisions of
sub-section (4), special notice is required from members proposing to move a
resolution at the next annual general meeting to appoint a person other than
the retiring auditor or to provide that the retiring auditor shall not be
re-appointed.
Such special notice shall not be required in case
where the retiring auditor has completed a consecutive tenure of five years or,
as the case may be, ten years, as provided under sub-section (2) of section 139.
Following points are
relevant for the purpose of special notice and need to be complied with:
a) Company, on
receipt of such special notice for removing auditor, should forthwith send a
copy of the same to the concerned auditor.
{As per provisions of sub-section (4), company is required
to send a copy of the special notice of the resolution to remove auditor to the
retiring auditor. }
b) Auditors
representation: Sub-section (4) (iii) gives Right To The Retiring
Auditor To Make A Representation to the company in writing (not exceeding a reasonable length).
Ø
Auditor can request
its notification to members of the company.
Ø
In case auditor does
not request the company to notify the representation made by him to the
members, the company is not bound to do so.
Ø
If the company
receives the representation within reasonable time, and if requested by the
auditor, the company will have to state in the notice to the members that such
a representation has been made and send a copy of the representation to the
members.
Ø
In case
representation cannot be circulated because it was received too late or due to
default of the company, the auditor may require that the representation be read
out at the meeting and can also claim to be heard orally at the general meeting
as provided in sub-section (1) of Section 140.
Ø
Proviso to sub-section (4) provides that in case copy of representation Is Not Sent Due To Late Receipt or Default
Of The Company, A COPY THEREOF SHALL
BE FILED WITH THE REGISTRAR. However, no time has been prescribed. (This Copy shall be filled in form GNL_2)
Note: It should be noted that if auditor is found to be abusing the right of representation,
the company or any other aggrieved person shall make an application to the
Tribunal and if Tribunal is satisfied with the application, then, the copy of
the representation may not be send and the representation need not be read out
at the meeting. It is to be noted that the requirement of intimating the
members about the representation having been made in the notice sent to members
and right of auditor of being heard orally at the meeting cannot be dispensed
with.
Crux: If the auditor makes
a representation in writing to the company and requests for its notification to
the members, the company shall;
(i) State the fact of
representation in any notice of resolution, and
(ii) Send copy of representation to
members to whom notice of meeting is sent, whether before
or after the
receipt of representation by the company.
(iii)
If the copy of representation is not so sent, copy thereof should be filed
with the Registrar.
c) Such
representation should be of a reasonable length and not too long.
Rights of a retiring auditor (Notes): A retiring auditor shall have the following rights -
ü Right to receive a copy of
special notice.
ü
Right to make
representation in writing and request its notification to members.
ü
Unless the
representation received is too late by company, the right to get it circulated
among members.
ü
Right to get his
representation read out at the meeting, if not circulated by the company.
ü
Right to be heard
orally at the meeting.
Forms Require filing with ROC:
1. e-form- MGT-14 (Attachment- Special Notice,
Notice of GM, Resolution of General Meeting).
2. e-form GNL-2 (Attachment-
ADT-1(consent of new auditor).
The above mention is
process relating to Appointment of Subsequent Auditors of Company.
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