APPOINTMENT OF AUDITOR IN CASE OF CASUAL VACANCY
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Casual vacancy of Auditor means non appointment of Auditor at annual general meeting of the company. Casual Vacancy is governed by Sub Section 8 of Section 139 of Companies Act, 2013. So this situation may occur broadly due to two major reasons.
- Resignation by the Auditor
- Reason other than resignation by the Auditor
In both the situation appointment of new Auditor is required. Procedure to fill the vacancy in both the cases is different which is elaborated below.
So before forwarding towards procedure one must identify the reason for such vacancy i.e. vacancy due to resignation or not.
CASE A: CASUAL VACANCY DUE TO RESIGNATION BY THE AUDITOR
| Step 1 | Identify new Auditors on place of previous Auditor. |
| Step 2 | Send a letter to Proposed Auditor regarding their appointment. |
| Step 3 | Receive Eligibility & Consent Certificate from the New Auditor. |
| Step 4 | Call & Hold Board Meeting. |
| Step 5 | Pass resolution for Appointment of New Auditor |
| Step 6 | Submit E – Form ADT 1 within 15 days of appointment of new Auditor in Board Meeting. |
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OTHER FACTORS IN CASE A
| Time Period | Within 30 days of Vacancy. |
| Term of Appointment | Up to Next AGM |
| MGT – 14 | No need to file MGT – 14 |
| Circular Resolution | Circular resolution is enough to appoint Auditor. |
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CASE B: CASUAL VACANCY DUE TO REASON OTHER THAN RESIGNATION BY THE AUDITOR
| Step 1 | Identify new Auditors on place of previous Auditor. |
| Step 2 | Send a letter to Proposed Auditor regarding their appointment. |
| Step 3 | Receive Eligibility & Consent Certificate from the New Auditor. |
| Step 4 | Call & Hold Board Meeting. |
| Step 5 | Pass resolution for Appointment of New Auditor |
| Step 6 | Issue Notice of EGM (Extra ordinary General Meeting) |
| Step 7 | Pass Ordinary Resolution |
| Step 8 | Submit E – Form ADT 1 within 15 days of appointment of new Auditor in EGM. |
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OTHER FACTORS IN CASE B
| Time Period | Within 30 days of Vacancy. |
| Time for EGM | Shareholder must approve new Auditor in EGM within 90 days of appointment. |
| Term of Appointment | Up to Next AGM |
| MGT – 14 | No need to file MGT – 14 |
| Circular Resolution | Circular resolution is enough to appoint Auditor. |
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