The concept of One Person Company (OPC) is well understood by all of us and doesn’t need any introduction. We all are aware of the privileges enjoyed by an OPC in comparison to other forms of companies, like non-requirement of holding general meeting, non-requirement of holding board meeting (in case there is only one director), non-requirement of preparing cash flow statements and so on.
Now, keeping aside the privileges enjoyed by an OPC, let us discuss about how to appoint an auditor in casual vacancy in an OPC.
Section 139(8) of the Companies Act, 2013 (the Act):
“(8) Any casual vacancy in the office of an auditor shall—
(i) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, 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;
(ii) in the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within thirty days:
Provided that in case the Comptroller and Auditor-General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next thirty days.”
If we break through the provision, keeping in view that in case of OPC, accounts are not subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, the following questions/ difficulties arise:
a. If there is only one Director in the OPC then there’s no requirement of holding a BM, then in that case, how can the Board appoint an auditor in casual vacancy?
b. If the casual vacancy is due to the resignation of an auditor, then according to the provisions, the appointment of auditor in casual vacancy is subject to approval of the members in a general meeting, to be held within 3 months of the recommendation of the Board and in case of OPC, there is no requirement of holding a general meeting (AGM/EGM), then in that case, how the member of an OPC will approve the appointment?
c. As in the case of an OPC there is no requirement of holding an AGM, then for how long the auditor in casual vacancy will hold the office of auditor?
Now, let’s have a look at the answers to the above-mentioned questions:
a. Where there is only one director on the Board of an OPC and any business is required to be transacted at the meeting of the Board of Directors of the company, it shall be sufficient if, in case of such OPC, the resolution by such director is entered in the minutes-book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all purposes under this Act. [Section 122(4)]
b. For any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if, in case of an OPC, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act. [Section 122(3)]
c. OPCs are required to file AOC-4 within 180 days from the end of a financial year i.e., 27th September of every year. This clearly implies that the financial statements, board report are to be adopted by the sole member on or before 27th September of every year, which is done by communicating resolution to the Company. Further, for the purpose of date of AGM, the date of signing of such resolution is considered. Therefore, an auditor appointed in casual vacancy shall hold the office up to such date.
It can be concluded that the date of signing of minutes shall be the deemed date of BM/AGM/EGM.
Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues. The author can also be reached at [email protected]