Procedure for Filing of a Casual Vacancy of an Auditor in case of a Government Company

Aakanksha Singhal

Aakanksha Singhal

Published on: Oct 8, 2022

Khushboo Sharma

Updated on: Nov 14, 2024

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Introduction:

A casual vacancy gets created in the office of an Auditor due to reasons like resignation, death and/ or removal of the respective Auditor. In either of the scenario, company has to fill the casual vacancy so created by appointing a new Auditor.

In case of Government Companies or any other company* owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, any casual vacancy in the office of the Auditor of such companies shall be filled by the Comptroller and Auditor-General of India within thirty days.

In case the Comptroller and Auditor-General of India is unable to fill the vacancy within the said period, the Board of Directors of such company shall fill the vacancy within the next thirty days.

Note: The Ministry of Corporate Affairs vide its Circular dated July 31, 2014 has clarified that the documents like Articles of Association and shareholders agreements etc. envisaging control in terms of the provisions of the Companies Act, 2013 are to be taken into account while deciding whether an individual company is covered under the provisions of Section 139(5) & 139(7) (on Appointment of Auditor by the Comptroller and Auditor General (C&AG) in case of Government Company) of the Act.

Applicable Provisions:

1. Section 94, 117, 139, 141 of Companies Act, 2013
2. Rule 4 of Companies (Audit and Auditors) Rules, 2014

Mandatory Requirements:

1. Obtain recommendations from the Audit Committee, if any with respect to all the appointments, including the filling of a casual vacancy of an auditor
2. Obtain Written consent from the Auditor on or before the date of his appointment and a certificate indicating the adherence to the criteria provided in section 141 (on Eligibility, Qualifications and Disqualifications of Auditors) of the Act
3. Auditor’s appointment shall be in accordance with the following conditions:
   • individual or firm, as the case may be, is eligible for appointment and not disqualified under Chartered Accountants Act, 1949 and rules or regulations made thereunder
   • proposed appointment is in line with the term provided under the Act
   • proposed appointment is within the limits laid down by or under the authority
   • list of proceedings against the auditor or audit firm or any partner of the audit firm pending w.r.t professional matters of conduct, as disclosed in the certificate, is true and correct
   • conforms to the provisions of section 141 of Companies Act, 2013
4. Intimate the Registrar about appointment of auditor made by the Comptroller and Auditor General (C&AG).

Procedure:

1. Filing Casual Vacancy in the Office of the Auditor:
   The casual vacancy in the office of the Auditor in case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments shall be filled through any of the following ways:
   • Filing of Casual Vacancy by the Comptroller and Auditor General of India (C&AG) of India [Section 139(8)(ii)]
     Any casual vacancy in the office of an auditor in case of any Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments shall be filled by the Comptroller and Auditor-General of India (C&AG) within 30 days.
   • Filing of Casual Vacancy by Board of Directors in Board Meeting [Section 139(8)(ii)]
     In case the Comptroller and Auditor-General of India (C&AG) is unable to fill the casual vacancy within the said period of 30 days, the Board of Directors of such company shall fill the casual vacancy in the office of the Auditor within the next thirty days in a duly convened Board Meeting.
     Please refer to the Procedure for Conducting Board Meeting for the detailed procedure.
2. File Form MGT-14 with ROC:
   The company shall file Form MGT-14 with the Registrar of Companies (ROC) within 30 days of the Meeting in which such Auditor is appointed along with fee as specified in the Companies (Registration offices and fees) Rules, 2014 and the requisite documents.
3. Filing Notice of Appointment with the Registrar [Section 139(1) and Rule 4(2)]:
   The Company shall inform the First Auditor so appointed about the appointment and subsequently file a notice of such appointment with the Registrar in Form No. ADT-1 within 15 days of the meeting in which such Auditor is appointed along with the following attachments:
   • Mandatory:
     • Copy of written consent given by auditor
     • Copy of resolution passed by the board/company in case Nature of appointment is other than Auditor appointed by the Tribunal or Others
     • Copy of the order of the Tribunal in case Nature of appointment is Auditor appointed by the Tribunal
   • Optional:
     • Copy of the intimation sent by company
     • Copy of the letter of appointment from C&AG
     • Optional attachments, if any.