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CS Executive · Company Law and Practice · Accounts and Auditors

The auditor of Lotus Engineering Ltd, which is not audited by a CAG-appointed auditor, resigned mid-term. The Board filled the casual vacancy with CA Firm Mehta & Co. Which statement is correct?

When a casual vacancy arises from an auditor's resignation, the Board fills it within thirty days, but the appointment must also be approved by the company at a general meeting convened within three months of the Board's recommendation. The appointee holds office until the next annual general meeting concludes.

  1. AThe Board's appointment alone is sufficient and the firm holds office until the next AGM
  2. BThe appointment must also be approved by the company at a general meeting convened within three months of the Board's recommendationCorrect
  3. CThe appointment must be approved by the company within thirty days at a general meeting
  4. DThe appointment needs approval by the Registrar within three months

Explanation

The Board fills a casual vacancy within thirty days. Where the vacancy arises from the auditor's resignation, the appointment must also be approved by the company at a general meeting convened within three months of the Board's recommendation. The firm then holds office until the conclusion of the next annual general meeting. The first option ignores the extra approval needed for resignation.

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