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auditor

nidhigoel89 (Company Secretary ) (594 Points)

10 December 2010

Hello Everyone!

I have a query, a auditor filing his resignation before his tenure got expired or during the financial year. That would not be considered as casual vacancy. So if in EGM we will appoint a new auditor then that would be consider as Special Business, where as appointment of auditor is a ordinary business.

So plz, throw some light if i am missing out something or some section.

Nidhi

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 10 December 2010

Hi,

In your case the resignation would be treated as casual vacancy u/s 224(6) which can be filled up by appointing a new auditor through an ordinary resolution of shareholders in the general meeting (EGM).

Yes according to me it is a special business so prepare a small explanatory statement for the purpose of EGM notice u/s 173. This resolution will be an ordinary resolution.

Please revert if there is any doubt.

Regards

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nidhigoel89 (Company Secretary ) (594 Points)
Replied 10 December 2010

Sir,

Thanks for ur reply, now as per ur ans i have 2 query

1) As per ur saying that would be special business.....and appointment of auditor wuld be consider as ORDINARY business only in AGM.

2) As per my understanding only death and disqualifiaction of auditor are considered as casual vacancy......

Plz suggest.

Nidhi

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 10 December 2010

Originally posted by : nidhigoel89
	2) As per my understanding only death and disqualifiaction of auditor are considered as casual vacancy...... Plz suggest. Nidhi

No there is nothing like that. It is a casual vacancy. Kindly refer section 224(6).

Nitin Grover (CS) (1228 Points)
Replied 10 December 2010

Dear Nidhi

Board can also appoint auditor if previous auditor resign or casual vacany becomes due to of it.

Regards

nidhigoel89 (Company Secretary ) (594 Points)
Replied 11 December 2010

Hello Nitin Sir,

As per Sec 224(6) its specifically given that if casual vacancy is becoz of auditor resignation then that can b filled only in GM.

Nidhi

Rajeev kumar Nayak (ACS) (283 Points)
Replied 11 December 2010

Hi,

As per Section 224(6) of the Companies Act, 1956 , the Board has the power to fill the casual vacancy in the office of Auditor except in case of resignation by Auditor. resignation is also casual vacancy. only difference is in case of resignation, power to fill casual vacancy vest with Shareholders.

further concept of ordinary business is only for AGM and all business transacted at EGM is considered special.

so call a EGM, give a simple explanation of resignation by Auditor and appoint a new auditor who shall hold office till the conclusion of next AGM.

With Regards

Rajeev

Syam kamal (Company Secretary) (156 Points)
Replied 11 December 2010

Vacancy caused by the death of an auditor is a causal vacancy and the Board has the power to fill the casual vacancy. But vacancy caused by the resignation of auditor can be filled only by the company at its general meeting.

nidhigoel89 (Company Secretary ) (594 Points)
Replied 11 December 2010

Thanks everyone....................nw my concept is very much clear...............tanks a lot......

Nidhi

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 11 December 2010

As per section 224(6)

The Board my fill any casual vacancy in the office of an auditor;... Provided that where such vacancy caused by the resignation of an auditor, the vacancy shall only be filled by the company in general meeting (AGM or EGM).

Casual Vacancy:-

The expression casual vacancy has not been defined in the Companies Act, 1956. Simply stated, a casual vacancy in the office of an auditor means a vacancy caused in the office of an auditor by his death, disqualification, resignation etc.

It has been held in the case of the Institute of Chartered Accountants of India vs. Jnanendranath Saikia that casual vacancy is not a vacancy created by any deliberate ommission on the part of the company to appoint an auditor at its annual general meeting.

Where the casual vacancy is caused by resignation of an auditor, the Board cannot fill up the casual vacancy but place the matter before the company in the General Meeting for appointing an auditor in respect of the casual vacancy.

The resolution would ofcouse be Ordinary Resolution.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 11 December 2010

Vacancy caused by the resignation of an auditor shall be filled by the Company in general meeting.

So call an EGM and appoint the new auditor. All businesses considered in EGM will be Special. However the resolution for appointment of auditor will be Oridinary.

(Guest)

Dear friends,

Both vacancy due to resignation and death of auditor are casual vacancy. But procedure to fill it up is different. Please understand the logic.

1. Death of auditor: It can happen because every one will die. Board is not responsible for death of auditor. And share holders have trust on board of directors to manage business. So board was given power to appoint auditor incase of death.

2. Resignation of auditors: But resignation of auditor is not like death of auditor. There will be many reasons. Even board may be responsible for that. Example: He would have noticed some issues in company where board may threaten him not disclose. He might be restricted in access to books and records by board. So share holder should know what the reason for his resignation is. So power to fill up the vacancy is only with share holders.

Correct me if I am wrong.

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