Appointment of Auditor in Casual Vacancy in an OPC

As it enjoys advantages over other types of corporations, such as the lack of a necessity to hold a general meeting, the lack of a requirement to hold a board meeting (if there is only one director), the lack of a requirement to prepare cash flow statements, and so on.

Section 139(8) of the Companies Act, 2013 (the Act):

“(8) Any casual vacancy in the office of an auditor shall—
1. In the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Board of Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting;

2. In the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within thirty days:
If the Comptroller and Auditor-General of India fails to fill the position within the specified time, the Board of Directors shall replace the vacancy within the next thirty days.”

If we disregard the provision, and consider that OPC accounts are not subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, the following questions/problems arise:

a. If there is only one Director in the OPC then there’s no requirement of holding a BM, then in that case, how can the Board appoint an auditor in casual vacancy?

b. If the casual vacancy is due to the resignation of an auditor, then according to the provisions, the appointment of auditor in casual vacancy is subject to approval of the members in a general meeting, to be held within 3 months of the recommendation of the Board and in case of OPC, there is no requirement of holding a general meeting (AGM/EGM), then in that case, how the member of an OPC will approve the appointment?

c. As in the case of an OPC there is no requirement of holding an AGM, then for how long the auditor in casual vacancy will hold the office of auditor?

Now, let’s have a look at the answers to the above-mentioned questions:

a. Where there is only one director on the Board of an OPC and any business is required to be transacted at the meeting of the Board of Directors of the company, it shall be sufficient if, in case of such OPC, the resolution by such director is entered in the minutes-book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all purposes under this Act. [Section 122(4)]

b. For any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if, in case of an OPC, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act. [Section 122(3)]

c. OPCs are required to file AOC-4 within 180 days from the end of a financial year i.e., 27th September of every year. This clearly implies that the financial statements, board report are to be adopted by the sole member on or before 27th September of every year, which is done by communicating resolution to the Company. Further, for the purpose of date of AGM, the date of signing of such resolution is considered. Therefore, an auditor appointed in casual vacancy shall hold the office up to such date.

CONCLUSION
It can be concluded that the BM/AGM/EGM will be deemed to have taken place on the date of the signing of the minutes.