Law And Procedure for Removal Of Auditor(s)Before Expiry Of His Term:In terms of Section 224(7) of the Act, an auditorappointed in an AGM may be removed from the officebefore the expiry of his term by the company only ingeneral meeting after obtaining the previous approvalof the Central Government in this behalf except asprovided in proviso to section 224(5). (Now this poweris delegated to Regional Director under notificationno. G.S.R. 223(E) dated 18 March 2011.
The steps for removal of an auditor before theexpiry of his term is as follows: Step I: A special notice of not less than 14 days is to be given by a shareholder to the Company for removal of the Auditor and appointment of new auditor subsequent to the removal of Auditor. Step 2: Obtaining a certificate in writing from the new auditor to the effect of his eligibility to act as auditor, if appointed;
Step 3: Holding a board meeting of the Company topass the necessary resolutions to:(i) consider the special notice for removal of Auditorgiven by the shareholder and to decide the day, time andplace for calling the EGM;(ii) to approve the draft notice of EGM and explanatorystatement thereof and to authorize the companysecretary or director of the Company to issue the notice;
(iii) to authorize the director or manager of theCompany to make an application to the CentralGovernment under Section 224(7) for removal ofthe Auditor; and(iv) to authorize the company secretary or director ofthe Company to inform the Auditor of the decision ofthe board of his removal. Step 4: Intimate the Auditor of his removal inwriting along with a copy of the special notice asgiven by the Shareholder.
Step 5: Holding of EGM to pass the necessaryresolutions to:(i) approve removal of the Auditor from the office of statutoryauditors of the Company;(ii) appointment of new auditors subject to approval of regionaldirector to hold office until the conclusion of next AGM;(iii) to authorize the director, company secretary or manager ofthe Company to intimate the new auditor of his appointment; and(iv) to authorize the director or manager of the Company to makean application to the Central Government (Regional Director)under Section 224(7) of the Act for removal of the Auditor.
Step 6: Making application to the Regional Director(Central Government) in whose jurisdiction the registeredoffice of the Company falls in e-Form No. 24A along withthe following documents: Copy of ordinary resolution; Copy of special notice under section 224(7) of the Act; Copy of the representation, if any, made by the Auditor. Grounds of making application for removal of Auditor.
Step 7: Upon receipt of approval from regionaldirector intimate the new auditor of his appointment asan auditor of the Company to hold the office until theconclusion of next Annual General Meeting.