shareholding of LlC and UTI increased

(i) Section 224(5) empowers the Board of Directors of a company to appoint the first Auditor or Auditors of the company within one month of the date of registration of the company. If the Board fails to exercise its powers, p~oviso (b) to Section 224(5) will be attracted and the company in general meeting m..:. y
appoint the first Auditor or Auditors. It is not necessary to convene AGM for this purpose; the appoin~ent may be made even in EGM.
(ii) Section 224(6)(a) empowers the Board to fill any casual vacancy in the office of an Auditor. But where such vacancy is caused by the resignation of an Auditor, the vacancy shall be filled by the company in general meeting. As one of the Joint Auditors has resigned, the casual vacancy arising out of such resignation can be filled up by the company only in general meeting. How

B
ever, the remaining Auditor(s) may continue to act.
iii) Where there is a change in the constitution of a firm of Chartered Accountants due to the retirement or death of a partner, the remaining partners can carry on the existing audit assignments standing in the firm's name, provided that the firm continues to be in practice and the companies under audit have the knowledge of the retirement or death of a partner. The firm as such is not dissolved and after reconstitution it continues to carryon its profession in the old name. There is no casual vacancy. As such the question ohppointment of new Auditors does not arise.
(iv) Nationalised banks, LIC and lOBI are corporations owned or controlled by
~entral Government. As their combined shareholdings exceed 51% of the
Jpaid-up share capital of the company, the provisions of Sec. 619B are attracted and the Auditor will have to be appointed as if it were a Government company. In a Government company, the Auditor will be appointed or reappointed by the Central Government on the advice of the Comptroller and
Auditor General of India. Hence, the company in this case must apply to the . Deptt. of Company Affairs for appointment of Auditors [Section 619].
~ 49. How would you deal with the following situations in the matter of appointment of Audito[s?
"(i) jhe shareholding of LlC and UTI increased from 23% to 27% of the subscribed
share capital of the company after issue of notice of the AGM.
(ii) Ordinary resolution is passed at the AGM of a company when a special
resolution is required to be passed for appointment of Auditor.
fC.A. (Final) Nov., 1996]

Ytns .
(i)

Section 224A which was inserted by the Companies (Amendment) Act, 1974, provides that in case of a company in which 25 per cent or more of the subscribed share capital is held whether singly or in any combination, by :
(a) a public financial institutions or a Government company or Central
Government or any State Govemment; or
(b) any financial or other institution established by any provincial or State
Act in which a State Government holds not less than 51 per cent of the
subscribed share capital; or