Emali Co. Ltd. has undergone a period of substantial growth following its establishment five years ago. At the last annual general meeting Smith & Co. Associates, a tow-partner firm ofCertified Public Accountants were re-appointed as auditors. However, Smith & Co. Associates have decided that they do not have the necessary resources to audit the enlarge company.Required: How any a casual vacancy arising from the resignation of present auditors be filled and what procedures are necessary before the company‘s next annual general meeting at which the appointment will be presented for ratification?

Section 159 (6) Casual vacancies
The companies Act provides that the directors may fill any casual vacancy in the office of the auditor, but while any such vacancy continues the surviving or continuining auditor or auditors, if any, may act. A casual vacancy could arise as a result of:
i) death
ii) incapacitation or
iii) resignation
Basing on this provision the directors can fill the vacancy created by the resignation of Smith & Co. however; the shareholders of the company still have a right to remove the auditor so appointed during the AGM.

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