Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Friday, April 29, 2016

Procedure to fill up the Casual Vacancy in the Office of Auditor

Sub section 8 of Section 139 of Companies Act 2013, provides provision for casual vacancy in the office of the auditor. Casual vacancy of Auditor may arise due to following two reasons:
ü  Casual vacancy due to reason other than resignation of Auditor.
ü  Casual vacancy arise due Resignation of Auditor.
Casual vacancy due to reason other than resignation of Auditor:
If the casual vacancy arises due to any reason other than resignation of the auditor than following procedure & Provisions are required to follow:
1)      Board of Directors of the Company is required to appoint a Statutory Auditor in place of previous Auditor within 30 days from the date of Casual vacancy.
2)      The Auditor so appointed by the Board, shall be the auditor of the company up to ensuing Annual General Meeting from the date he is appointed and he shall be liable to retire or may be re-appointed in the ensuing Annual General Meeting.
3)      It must be noted that casual vacancy of the auditor arisen due to reason other than resignation may be merely filled by passing Circular Resolution and it is not compulsory to hold Board meeting for appointment of auditor in order fill the casual vacancy.
4)      The Board of Directors of the Company is required to File Form ADT-1 with the ROC within in a period of 15 days from the date of appointment of auditor.  
5)      It should be noted that Form ADT-3 is not required to be filled with ROC in the case of casual vacancy due to reason other than resignation of the Auditor.

Casual vacancy arises due to Resignation of Auditor:
If the casual vacancy arises due to Resignation of the auditor than following procedure & Provisions are required to follow:
1)      Board of Directors of the Company is required to appoint a Statutory Auditor in place of previous Auditor within 30 days from the date of Casual vacancy.
2)      It must be noted that casual vacancy of the auditor arisen due to Resignation of the auditor may be merely filled by passing Circular Resolution and it is not compulsory to hold Board meeting for appointment of auditor in order fill the casual vacancy.
3)      Such appointment shall be approved only by the Share Holders in their Extra-Ordinary General Meeting.  Therefore the company is required to hold an Extra-Ordinary General Meeting within 90 days from date of appointment of such auditor by the Board of Directors, for getting the consent of the members by passing ordinary resolution.
4)      The Auditor so appointed, shall be the auditor of the company up to ensuing Annual General Meeting from the date he is appointed and he shall be liable to retire or may be re-appointed in the ensuing Annual General Meeting.
5)      The auditor resigning from his office before the expiry of his term of          his term, needs to file Form ADT-3 along with his resignation letter, with the ROC within 30 days from the date of his resignation.
6)      The Board of Directors of the Company is required to File Form ADT-1with the ROC within in a period of 15 days from the date of appointment of auditor In the Extra-Ordinary General Meeting.

It must be noted that Non-ratification of Auditor by Shareholders in Annual General Meeting also considered as Casual Vacancy other than resignation of Auditor. There is no Need to file MGT-14 in such case for appointment of Auditor
In case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor General of India, the power to fill any casual vacancy is vested with the CAG. In case of a failure by the CAG to fill the casual vacancy within a period of 30 days, the Board of Directors is required to fill the same with within the next 30 days.
The Auditor so appointed in a casual vacancy shall hold office until conclusion of the next Annual General meeting. 

Contributed by : Mohd Sharjeel Awasi, Company Secretary & CA Finalist from Sandeep Ahuja & Co

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