CA NITESH MORE
It is generally said by every expert that an auditor will be removed under new company Law only after obtaining previous approval of central Govt. Sec 140(1) confirms this. However, in my opinion an auditor can be removed under new company Law without obtaining previous approval of central Govt also .
A) The auditor can be removed under sec 140(1) with previous approval of CG
B) The auditor can also be removed under sec 139(9) without approval of CG
A) Removal by Special Resolution and previous approval of the Central Government: [Sec 140(1)]
Example: PWC is an auditor of Reliance Ltd. Company wants to remove PWC in December, 2018. Company has to obtain previous approval of CG &also has to follow other procedures prescribed u/s 140(1).
B) Reappointment of retiring auditor at AGM [Sec 139(9)]: A retiring auditor may be re-appointed at an annual general meeting, if
Example: XYZ is appointed as an auditor of ABC Ltd in AGM of Sep 2016 for 5 years. Company in AGM of Sep 2018 appointed DEF as auditor by passing a special resolution.
Can XYZ continue as auditor of company?
Answer: As per sec 139(9), A retiring auditor may be re-appointed at an annual general meeting, if a special resolution has not been passed at that meeting appointing some other auditor. In the above case, as special resolution has been passed appointing DEF as auditor, hence, XYZ cannot continue.