AUDITOR HAD NOT BEEN APPOINTED IN AGM: WHAT TO DO? BY CA NITESH MORE Lots of small & medium size private limited companies had not appointed auditors in last AGM . As per sec 139(10), where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company. It is to be noted that existing auditor has not been appointed u/s 130(10), but he shall continue as auditor. Company neither has to intimate to the existing auditor nor to ROC about this. However, as per sec 141(3)g, an auditor shall not be eligible to be appointed as auditor if as on the date of appointment he is holding more than 20 company audit. As per sec 141(4), where a person appointed as an auditor of a company incurs any of the disqualifications mentioned in sub-section 141(3) after his appointment, he shall vacate his office as such auditor and such vacation shall be deemed to be a casual vacancy in the office of the auditor. As per sec 139(8), any casual vacancy in the office of an auditor shall be filled by the Board of Directors within thirty 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. As per Sec 146, the auditor shall, unless otherwise exempted to attend general meeting by the company, attend either by himself or through his authorized representative, who shall also be qualified to be an auditor, any general meeting and shall have right to be heard at such meeting on any part of the business which concerns him as the auditor. Case 1: When auditor has attended the AGM: If auditor has attended the AGM, he must have disclosed to the shareholders that he is holding 20 company audit & hence disqualified. In such a case, the following questions arise: a) Can AGM be finished without transacting a business i.e. without appointing an auditor? b) Should AGM be adjourned so that another auditor be appointed? In my view, AGM should be adjourned to appoint another auditor. Adjourned AGM should be held after taking approval from ROC. Case 2: When auditor has not attended AGM & company approached auditor on 15th Dec,2014 A Pvt Ltd approached his auditor on 15th Dec, 2014 & argued that he is continuing u/s 139(10). Auditor shall vacate the office by submitting resignation if he is disqualified & file ADT3. It will result casual vacancy & will be filled in 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 only. Case 3: When auditor has not attended AGM & when company approaches auditor on 15th June,2015 A Pvt Ltd approaches his auditor on 15th June, 2015 & argued that he is continuing u/s 139(10). Auditor can continue as auditor, if he is not disqualified.
Posted on: Sun, 11 Jan 2015 06:36:10 +0000
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