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PROCEDURE FOR APPOINTMENT OF A NEW AUDITOR, FROM RESIGNATION BEFORE THEIR TERM EXPIRES.

PROCEDURE FOR APPOINTMENT OF A NEW AUDITOR, FROM RESIGNATION BEFORE THEIR TERM EXPIRES.

From the perspective of the company, as per Section 139 (8)(i) The procedure for appointment of auditors in case of a casual vacancy, which may arise due to resignation of the auditor, before the expiry of their tenure, is filed up by the Board of Directors within 30 days. It should also be approved by the company at a General Meeting convened within 3 months of the recommendation of the Board and he shall hold office till the conclusion of the next annual general meeting.

Procedure:
  • Obtain resignation letter with FORM ADT-3 from resigning auditor;
  • Give notice for holding Board Meeting and calling it for acceptance of resignation of director;
  • Send letter to new auditor seeking consent and certificate from new auditor for eligibility of appointment;
  • Obtain consent letter and certification from auditor.
  • Call Board meeting for filling up casual vacancy filing up the casual vacancy within 30 days  from the date on which the casual vacancy arose.
  • Approve the notice for EGM within 90 days of appointment of the Board of Director.
  • Hold EGM and pass ordinary resolution for approval of auditor appointment.
  • File an e-form ADT-1 for appointment of new Auditor within 15 days of appointment of Auditor in an extra-ordinary General Meeting.

According to Section 140(2) of the Companies Act, 2013, the auditor who has resigned from the company shall file within a period of thirty days from the date of resignation, a statement in the prescribed form (ADT-3) with the company and the Registrar, And as per Section 140(3) of the Companies Act, 2013, if the auditor does not comply with sub-section (2), he or it shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

The Auditor shall:

·   Draft the resignation letter along with mention the reason of resigning and the date of resigning.
·        Intimate of his resignation to the Company within 30 days of resignation.
·     File an e-form ADT-3 along with detailed resignation letter with the Registrar of Company within 30 days of his resignation.



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