While the exit of the auditors could raise eyebrows, it should not be a reason of worry if the company is fundamentally strong and follows ethical guidelines, opined a report in Moneycontrol.

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It is only if the resignation is related to non-availability of information related to the company that investors should be alarmed.

According to the report, which comes after stocks like Vakrangee, Manpasand Beverages and Atlanta saw their market value fall heavily following the resignation of their auditors, the impact would only be short term if the company is transparent.

However, if the resignation of auditor is linked to the non- availability of information then its best to exit the stock, the report said. But, that too may not be sufficient enough to take the legal path.

"While per se, there is no legal recourse available to investors just because an auditor has resigned, it raises apprehensions on the quality and transparency of the financial information reported by the company,” Kalpana Unadkat, Partner, Khaitan & Co was quoted saying in the report.

According to the report, as the revised Securities and Exchange Board of India (Sebi) guidelines requires auditors to inform about the reason for resignation within 24 hours of resignation, it will be important for the investor to know the reason behind the resignation of the auditor prior to making any moves

First Published:Jun 4, 2018 5:13 PM IST