Filling of Casual Vacancy Arising Due to Resignation of Auditors [CS Tanuj Saxena]



Auditor Resignation

a. If Auditor is appointed by CAG(Comptroller and Auditor General of India) Resignation Letter mentioning reasons for such resignation to be given to CAG

b. CAG will appoint New Auditor within 30 days.

c. If CAG does not appoint within 30 days then Board of Directors will appoint New Auditor within next 30 days.

d. b) If Auditor is not appointed by CAG Following steps need to be taken:-

A) From the Resigning Auditor:

 Applicable Provisions: Sec 140(2) & (3) of Companies Act 2013

1. The auditor who has resigned shall file within 30 days from the date of resignation form ADT-3 with the Company and the Registrar.

2. The auditor shall indicate the reasons and other facts as may be relevant with regard to his resignation, in the statement.

3. If the auditor does not comply with provisions of Sec 140(2), he or she shall be liable to penalty of Rs. 50,000/- which may extend to Rs. 5,00,000/-.

b) Procedure: Resigning auditor must do the following:

1. Draft the resignation letter with mentioning the reasons for such resignation and date of resignation.

2. Intimation of his resignation to the Company within 30 days of resignation.

3. File e-form ADT-3 with registrar of Companies within 30 days of resignation.

Note:- Attachment for e-form ADT -3 is the Resignation Letter.

B) From the Company:-

a) Applicable Provisions –

Sec 139(8) of Companies Act,2013.

According to Section 139(8)(i) of the Companies Act, 2013, any casual vacancy in the office of  an auditor shall in the case of a company other than a company whose accounts are subject to audit by CAG, be filled by the Board of Directors within 30 days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting.

b) Procedures: Once a casual vacancy of Auditor due to resignation takes place, following steps needs to be complied.

1. Step 1:Obtain Form ADT-3 from the resigning Auditor duly filed with the Registrar.

2. Step 2:Obtain consent letter from the proposed auditor confirming his eligibility to be appointed.

3. Step 3:The Company shall issue letter of intention to add new Auditor for his appointment in the company.

4. Step 4:Proposed Auditor shall obtain NOC from the resigning Auditor.

5. Step 5:Company shall convene a board meeting within 30 days from arising of such casual vacancy after giving notice to all directors and pass a resolution for appointment of new Auditor.

6. Step 6:Inform the auditor so appointed with a copy of board resolution

7. Step 7:Issue notice for conduct of Extra Ordinary General Meeting (EGM) within 3 months from the date of recommendation of the Board.

8. Step 8 : Hold EGM and pass ordinary resolution to confirm the appointment of the proposed Auditor.

9. Step 9:File Form ADT-1 with the ROC within 15 days from the date of appointment in the EGM.

Note: 1. Attachment of e-form ADT-1 are:-

Copy of Intimation sent by the Company.

Consent & Certificate of the Auditor.

EGM Resolution.

Obtain intimation letter from the Company.

Obtain NOC from Resigned Auditor.

Send Consent & Certificate for the appointment as per the Companies Act, 2013 to the Company.

Ensure that the Company has filed Form ADT-1 within time limit.

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