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CA Intermediate · Corporate and Other Laws · Audit and Auditors

Orbit Foods Ltd's members, at a general meeting, wish to remove the auditor, Mr. Iyer, before the expiry of his term. Mr. Iyer was appointed at the AGM for five years and has completed two years. Which course of action is legally valid?

The auditor can be removed before the end of the term only by passing a special resolution at a general meeting after obtaining the previous approval of the Central Government. An ordinary resolution or a Board resolution is not sufficient.

  1. APass an ordinary resolution at the general meeting after obtaining the previous approval of the Central Government
  2. BPass a special resolution at the general meeting after obtaining the previous approval of the Central GovernmentCorrect
  3. CThe Board may remove him by a Board resolution at any time
  4. DPass a special resolution at the general meeting without any government approval

Explanation

An auditor appointed by members can be removed before the end of the term only by a special resolution of the company, and only after the previous approval of the Central Government. The Board has no power to remove him. An ordinary resolution is insufficient, and a special resolution alone without government approval is also incomplete.

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