Companies Act, 2013 has laid down various provisions and sections in terms of appointment of auditor of the Company. Once a company gets registered there are lot of legal binding on the newly incorporated company to be complied within the stipulated time frame. As per the provisions of sec 139(1) of the Companies Act, 2013, company needs to appoint an Auditor within 30 days from the date of incorporation of the Company. A company being an entity created by law, needs an auditor to conduct yearly statutory audits of the company for timely reflection of true and fair views of financial disclosures. Casual vacancy means a vacancy which is unpredictable and caused due to death, resignation, disqualification of the Auditor. Appointment of Auditor in case of casual vacancy is regulated by sec 139(8)(i) of the Companies Act, 2013.
The concept of auditor casual vacancy can be categorized into two situations-
In India there are many Government companies whose accounts are subject to Audit by such auditors who are appointed by Comptroller And Auditor General Of India. If any casual vacancy for an Auditor in the office shall be filled by the Comptroller and Auditor General of India within 30 days.
In case of Companies whose accounts are not subject to audit by an auditor appointed by Comptroller And Auditor General Of India further splits into below 2 conditions-
If the Auditor resigns and casual vacancy arises due to such resignation then the board of directors of the company should file within 30 days and the appointment made by the board of directors shall be approved in the Extra Ordinary General Meeting or Annual General Meeting convened within 3 months from the date of recommendation of the Board. Any auditor appointed in a Casual Vacancy shall hold office until the conclusion of the next Annual General Meeting.
Once a casual vacancy of Auditor due to resignation takes place, following steps needs to be complied.
Step 1: Obtain Form ADT-3 from the resigning Auditor duly filed with the Registrar.
Step 2: Obtain consent letter from the proposed auditor confirming his eligibility to be appointed.
Step 3: The Company shall issue letter of intention to add new Auditor for his appointment in the company.
Step 4: Proposed Auditor shall obtain NOC from the resigning Auditor.
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.
Step 6: Inform the auditor so appointed with a copy of board resolution
Step 7: Issue notice for conduct of Annual General Meeting (AGM) or Extra Ordinary General Meeting (EOGM) within 3 months from the date of recommendation of the Board.
Step 8 : Hold AGM or EOGM and confirm the appointment of the proposed Auditor
Step 9: File Form ADT-1 with the ROC within 15 days from the date of appointment in the AGM or EOGM.
If the casual vacancy is arising due to reason other than resignation then the board of directors of the company should file within 30 days.
There can be other reasons for casual vacancy of the Auditor other than resignation.
Step 1: Obtain Form ADT-3 from the resigning Auditor duly filed with the Registrar.
Step 2: Obtain consent letter from the proposed auditor confirming his eligibility to be appointed.
Step 3: Inform the auditor so appointed with a copy of board resolution.
Step 4: Intimate the Registrar in form ADT-1 with requisite filing fee and annexures.
Whenever an Auditor is appointed in general meeting by passing a special resolution, then form MGT-14 needs to be filed along with all requisite documents to be attasched with form MGT-14.
Section 140 (2) read with rule 8 of the Companies (Audit and Auditors) Rules 2014, the auditor who has resigned from the company shall file a statement in the Form ADT-3 within a period of 30 days from the date of resignation with the company and the Registrar.
If the Auditor fails to file Form ADT-3, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
Auditors appointment or resignation shall be intimated to the registrar of companies from time to time for a full fledge compliance adherence and to avoid huge penal and strict actions in terms of auditors, it becomes prima facie to comply a complete set of legal provisions as mentioned in the Companies Act, 2013.
