Chapter 1: Companies Act 2017

Question 1

Casual vacancy (5)

Answer 1

• Appointed within 30 days of such vacancy
• by Directors
• till next AGM
  (or by SECP if not appointed by directors within 30 days)
• Company shall intimate registrar within 14 days of casual vacancy (with consent of appointed auditor)

Question 2

Process of appointment of different auditor by shareholder(s)

Answer 2

1. Member/s with at least 10% shareholding
   > entitled to propose any auditor
   > after auditor’s consent
2. Notice by them shall be given to co. at least 7 days before AGM
3. After receipt > company shall
   - send a copy to retiring auditor
   - post it on website
4. Retiring auditor can make representation to co.
   - at least 2 days before
   agm
   - can be read in AGM
   - mandatory for auditor/rep to attend meeting
5. Company shall intimate registrar within 14 days of appointment or removal (with consent of appointed auditor)

Question 3

Situation where SECP appoints an auditor for co.

Answer 3

1. 1st auditor not appointed within 90 days of incorporation
2. Auditor not appointed in AGM
3. Casual vacancy not filled by directors within 30 days.
4. Auditors appointed are unwilling to act.

Question 4

Process of reappointment of existing auditor (3+2)

Answer 4

1. obtain consent of proposed auditor
2. notice to members with notice of general meeting
3. on appointment, board shall ensure:

• within 14 days an intimation to registrar is sent
• including auditors consent in writing

Question 5

Requirements for cost audits and its auditor (3)

Answer 5

• SECP may direct audit of cost accounts to be conducted in a specified manner and stipulations
• by a CA or CMA
  having same powers, duties etc.

(subject to recommendation of the regulatory authority supervising business of relevant sector)

Question 6

Disqualification of Auditor

Answer 6

1. Director, officer employee of Company:
   - current
   - in preceding 3 years
   - ‘s partner, employee
2. Spouse of director

Question 6

Disqualification of Auditor (9)

Answer 6

1. Director, officer employee of Company:
   - current
   - in preceding 3 years
   - ‘s partner, employee
2. Spouse of director
3. Person, firm partner(s)
   - ‘s spouse, minor children
   > holding any shares in Co. or assoc. co.
   (disinvest w90d of app)
4. Person indebted to Co. (OTOC); doesn’t include
   - =<90 days utility dues
   - <1000000 debt to cc issuer
5. Person given guarantee/security for co. (otoc) to 3rd party
6. Body corporate
7. directly/indirectly in business relationship with co. (otoc)
8. Convicted for fraud within less than last 10 years
9. Ineligible as per code of ethics adopted by ICAP, ICMAP

Question 7

Consequences of disqualification (4)

Answer 7

1. disqualified to audit for its holding/subsidiary/other subs of its holding
2. if disqualified after appointment => casual vacancy
3. If appointed being disqualified, void and SECP will appoint one themselves
4. Acts as auditor being disqualified = penalty level 2