Kanchan Finance Ltd. is a listed company. Since the term of the present statutory auditor is to hold office up to the conclusion of the upcoming…

(i) As per Rule 3 (1) of the Companies (Audit and Auditors) Rules, 2014, a company which is required to constitute an Audit Committee under section 177 of the Companies Act, 2013, the competent authority would be the Audit Committee anda company which is not required to constitute an Audit Committee under section 177, the competent authority would be the Board of Directors. The competent authority shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as auditor and such qualifications and experience are commensurate with the size and requirements of the company. The competent Authority shall have regard to any order or pending proceeding relating to professional matters of conduct against the proposed auditor before the Institute of Chartered Accountants of India (ICAI) or any competent authority or any Court. It may call for such other information from the proposed auditor as it may deem fit. (ii) As per Rule 3 (1) of the Companies (Audit and Auditors) Rules, 2014: Where a company is required to constitute the Audit Committee, the committee shall recommend the name of an individual or a firm as auditor to the Board for consideration. Here, Kanchan Finance Ltd. is a listed company, therefore, Audit Committee shall be constituted by Board of directors under section 177. If the Board disagrees with the recommendation of the Audit Committee, it shall refer back the recommendation to the committee for reconsideration citing reasons for such disagreement. If the Audit Committee, after considering the reasons given by the Board, decides not to reconsider its original recommendation, the Board shall record reasons for its disagreement with the committee and send its own recommendation for consideration of the members in the annual general meeting. Therefore, in the instant case, as the Board of directors of Kanchan Finance Ltd. was in disagreement with the opinion of the Audit Committee regarding the appointment of CA Trilok as an auditor, the Board shall send its own recommendation for consideration of the members in the annual general meeting, where the members will decide on the appointment of the auditor.