Appointment of Auditors in Casual Vacancy as per Companies Act 2013
Casual Vacancy of the Auditor means a vacancy caused due to death, resignation, disqualification etc. of the auditor after accepting a valid appointment because of which the auditor cease to act as auditor of the company.
How to fill Casual Vacancy arising due to resignation by the Auditor(s)?
IN CASE OF A COMPANY WHOSE ACCOUNTS ARE SUBJECT TO AUDIT BY AN AUDITOR APPOINTED BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
Any casual vacancy of the auditor in the office shall be filled by the Comptroller and Auditor General of India within thirty days.
IN CASE OF A COMPANY OTHER THAN COMPANIES WHOSE ACCOUNTS ARE SUBJECT TO AUDIT BY AN AUDITOR APPOINTED BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
If Casual Vacancy is arising due to the resignation of auditor, it shall be filled within 30 days by the Board of Directors, and the recommendation so made by the Board shall be approved in a general meeting (it can be Extraordinary General Meeting or Annual General Meeting) convened within 3 months from the date of recommendation of the Board.
Any auditor appointed in a Casual Vacancy shall hold office until the conclusion of the next Annual General Meeting.
There is no need for the approval of members if the casual vacancy arises due to reasons other than resignation. The reason may be death etc but does not include removal of the auditor.
How can resignation by the auditor be filed with the company?
The auditor shall file with the company a resignation letter stating the reason for resigning and file within 30 days from the date of resignation Form ADT-3 with the registrar. As per section 140(2) read with rule 8 of the Companies (Audit and Auditors) Rules, 2014, the auditor who has resigned from the company shall file a statement in the Form ADT-3 within a period of 30 days from the date of resignation with the company and the Registrar. Filing form ADT-3 is the responsibility of the auditor. Form ADT – 3 can only be filed with the registrar if ADT-1 of the relevant auditor was filed at the time of his appointment.
In case of default in the filing of the Form ADT-3, the auditor shall be punishable with minimum fine Rs. 50,000 or the remuneration of the auditor, whichever is less and maximum upto Rs. 5 lakh. [Section 140(3) as amended by the Companies (Amendment) Act, 2017]
What is the procedure to fill Casual Vacancy caused due to resignation?
1. Obtain from the resigning auditor Form – ADT-3 filed with the registrar.
2. The Company shall issue Letter of Intent to a new auditor for his appointment in the company.
3. The new auditor shall obtain NOC from the resigning auditor and, thereafter issue the consent letter and eligibility certificate to the company.
4. The Company shall obtain a certificate in writing from the proposed auditor confirming his eligibility to be appointed and consent for the appointment.
5. Convene a Board meeting within 30 days of arising Casual Vacancy after giving notice to all directors and pass a resolution appointing the new auditor in the place of the old auditor.
6. Inform the auditor so appointed with a certified copy of the resolution.
7. Issue notice to hold a general meeting within 3 months from the date of recommendation of the Board to the members of the company.
8. Hold the general meeting and approve the appointment of auditor already made by the Board of directors.
9. File form ADT 1 with the Registrar within 15 days from the date of appointment (i.e. 15 days from the date of appointment in general meeting) with requisite filing fees and annexures.
Casual Vacancy of the Auditor due to reasons other than Resignation:
Where Casual vacancy is arising by other than resignation then vacancy shall be filled by the Board within 30 days.
Steps required to fill Casual Vacancy of the Auditor due to reasons other than Resignation are:
1. Obtain certificate in writing from the proposed auditor confirming his eligibility to be appointed.
2. Convene a Board meeting within 30 days of arising casual vacancy after giving notice to all directors and pass resolution appointing the new auditor in the place of old auditor.
3. Inform the auditor so appointed with a certified copy of resolution.
4. Inform the Registrar in form ADT-1 with requisite filing fee and annexures.
MGT-14 shall be filed in case auditor is appointed by passing the Special Resolution.
(Author of this article is CS YOGESH GUPTA and can be contacted at [email protected] or 7742681270 for suggestion, Comment and Queries)