Appointment of Auditor other than retiring auditor at AGM

[Menaka]

Dear Members,

In a PVT Co , the first auditor has expressed his unwillingness  for his appointment as statutory auditor  of the Co.

My Query:

1. Whether Special Notice  is required as per sec.140(4)(i) of Co  Act,2013?

2. whether appointment of statutory auditor other than retiring auditor in the above case  is special business/should be passed as special resolution?

Kindly clarify.

Thanks & regards

Menaka

[Peer Mehboob]

1. Special Notice is not required as it is not the case of removal of auditor.

2. Appointment of auditor in place of retiring auditor is ordinary business u/s 102(a)(iv), require ordinary resolution. And if such auditor has resigned and casual vacancy be filled by Board of directors within 30 days subject to the approval of shareholders in GM by passing ordinary resolution.

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[CS Menaka]

Thanks mehboob for reply.

So as I understand this being fresh appointment of auditor in the first AGM,It shall be passed as OR.

Pls  correct me if I am wrong.

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[Peer Mehboob]

If the auditor of company is expressing his unwillingness in AGM, then another auditor can be appointed in the same AGM by passing OR and noting of the unwillingness of previous auditor be made in the said OR..

[Narayan Subramanian]

Dear Sir,

With the understanding that they do not want to continue till the AGM, then it should be treated as a casual vacancy and the Board has to appoint another Auditor within 30 days and further to be approved by Shareholders within 3 months of the Board Meeting. It is suggested that you get their unwillingness letter just 3 months before AGM so that if you appoint new auditor he will continue till next AGM. Since the first auditor is not a retiring auditor, there is no need of special notice.

Regards

S.Narayan

 

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[ABHIJIT DAS]

Pursuant to section 139(1) the first auditor of a company is appointed at the first AGM of the company and shall hold office from the conclusion of that meeting and thereafter till the conclusion of every sixth meeting. The concerned Auditor showing his unwillingness for his appointment has to resign from the company and shall file a statement in Form ADT-3 within 30 days of his resignation indicating the reasons and other facts as may be relevant with regard to his resignation. The vacancy caused by such resignation will have to be treated as casual vacancy and one should follow Section 140(4) which deals with the procedure for appointment of auditor other than retiring auditor where it is clearly mentioned that special notice shall be required for such resolution at an AGM.  

Also, Resolutions are required to be stated in the Notice where the Auditors or Directors to be appointed are other than the retiring Auditors or Directors, as the case may be. The nature of the concern or interest (financial or otherwise), if any, of (a) Directors and Manager, (b) Other Key Managerial Personnel, (c) Relatives of the persons mentioned above in any special item of business or in a proposed Resolution, shall be disclosed in the explanatory statement [Clause 1.2.5 of SS-2]. Therefore, a special resolution shall be required to be passed in respect of appointment of auditor other than the retiring auditor. 

[Narayan Subramanian]

Dear Abhijit

The casual vacancy auditor will hold office only till conclusion of succeeding AGM held after his appointment. You may have to re-appt them for further term of 4 consecutive years by receiving special notice under Sec 140. Please check Sec 139 (8) (i).

Special Resolution is not required. Only in case of removal of Auditor SR is required. This is considered under ordinary business and ordinary resolution is sufficient. Only Special Notice is required. 

Regards

S.Narayan