• Under the provisions of the Companies Act, an auditor may be appointed by the board of directors, the annual general meeting or the registrar of companies.
• Board of directors: the provisions of the Companies Act, confer upon the board of director power to appoint the first auditor of the company before the first annual general meeting. If no appointment is made before this meeting directors loose this power. However, directors are empowered to fill a casual vacancy in the office of the auditor.
• Annual general meeting: at every annual general meeting an auditor must be appointed to hold office from the conclusion of the meeting to that of the next annual general meeting. However, at every annual general meeting a retiring auditor is always deemed to have been re-appointed without any resolution to that effect unless:
o He is not qualified for re-appointment.
o He has intimated to the company his unwillingness to be re-appointed.
o The meeting has expressly resolved that he shall not be re-appointed.
o The meeting has resolved to appoint some other person auditor.
• Registrar: if at an annual general meeting, no auditor is appointed is deemed to be re- appointed, the company must notify the registrar within 7 days of the meeting. The registrar may appoint an auditor or for the company.
• A special notice of the intended resolution to remove an auditor from office must be given to the company by the person proposing to move it.
• The company must send a copy thereof to the auditor concerned. The auditor is entitled to make written representations, not exceeding reasonable length as his defence and may request the company to notify its members that he has made representations.
• The company must summon a meeting to deliberate the matter among other matters. Notice of the meeting must be sent to all members and must embody the proposed resolution. It must intimate to members that the auditor has made representations if any, and copies must be enclosed unless received too late by the company.
• If the auditors representations are received too late or are not enclosed by reason of the
company‟s default, the auditor is entitled to have them read out at the meeting.
• Copies of the auditors representations need not be enclosed in the notice or be read out at the meeting if an application by the company or other aggrieved person, the court is satisfied that the auditor is abusing his right to be heard to secure needless publicity for defamatory matter.
• The removal of an auditor from office take effect when the meeting by ordinary resolution so resolves.
Explain the rules that govern the appointment and removal of an auditor of a company.
