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CS Executive · Company Law and Practice · Accounts and Auditors

Sagar Foods Ltd, a company with an Audit Committee, has its auditor resign mid-term, creating a casual vacancy. The company is not subject to audit by a CAG-appointed auditor. Which course follows the Companies Act, 2013?

The Board fills the casual vacancy within thirty days. Because it arose from resignation, the company must also approve the appointment at a general meeting convened within three months of the Board's recommendation. The appointee holds office until the conclusion of the next annual general meeting.

  1. AThe Board fills the vacancy within thirty days, and the appointment is also approved by the company at a general meeting convened within three months of the Board's recommendationCorrect
  2. BThe members fill the vacancy at the next annual general meeting without any Board action
  3. CThe Board fills the vacancy within thirty days, and no general meeting approval is required
  4. DThe Central Government fills the vacancy within sixty days

Explanation

For a non-CAG company, the Board fills a casual vacancy within thirty days. Where the vacancy results from resignation, the appointment must also be approved at a general meeting convened within three months of the Board's recommendation. The appointee holds office till the next AGM, and the Audit Committee's recommendations must be considered.

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