Appointment of Auditor In Causal Vacancy Under Companies Act 2013

In the dynamic landscape of corporate governance, the occurrence of casual vacancies in auditor positions is not uncommon. These vacancies may arise due to various reasons such as the resignation, death, or disqualification of an auditor. While the Companies Act 2013 provides a framework to address such scenarios, navigating the process can be intricate without a clear understanding of the legal provisions and practical steps involved.

Here the article discussed only how to fill casual vacancy due to resignation of auditor.

1. If Auditor is appointed by CAG (Comptroller and Auditor General):

• Resignation Letter mentioning reasons for such resignation to be given to CAG

• CAG will appoint New Auditor within 30 days.

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

2. If Auditor is not appointed by CAG:

First step :

• Taking previous auditor Resignation letter and file the same to concern ROC. Applicable Provision Section 140(2) and 140 (3) of companies act 2013

• The auditor who makes resign gives the intimation to the company and registrar in form ADT-3 within 30 days from his resignation.

• Further the auditor must prescribe the reason and facts as may be relevant to his resignation.

Second step:

Filling Casual Vacancies Due to Resignation

Resignation is one of the most common reasons for a casual vacancy in the auditor's position. The Companies Act 2013 delineates the steps to be followed in filling such vacancies, which primarily involve coordination between the Board of Directors, the resigning auditor, and the shareholders of the company.

Key Steps in Filling Casual Vacancies:

1. Obtain Form ADT-3 from the resigning Auditor, filed with the Registrar.

2. Obtain consent letter from the proposed Auditor, confirming eligibility for appointment.

3. Issue letter of intention to add new Auditor, signaling appointment in the company.

4. Proposed Auditor obtains NOC from resigning Auditor.

5. Convene board meeting within 30 days of vacancy, notifying all directors. Pass resolution for new Auditor appointment.

6. Inform appointed Auditor with copy of board resolution.

7. Issue notice for Extra Ordinary General Meeting (EGM) within 3 months of Board recommendation.

8. Hold EGM and pass ordinary resolution to confirm proposed Auditor's appointment.

9. File Form ADT-1 with the ROC within 15 days of Auditor's appointment at the EGM.

Conclusion

Navigating casual vacancies in auditor appointments requires meticulous adherence to the legal provisions outlined in the Companies Act 2013. By understanding the procedural requirements and practical considerations involved, companies can ensure seamless transitions in audit functions while upholding compliance and governance standards. Effective coordination between the Board, auditors, and shareholders is pivotal in maintaining transparency and integrity throughout the appointment process.