Auditors reappointment

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 can we appoint new auditor in place of old auditor before the expiry of his term??...
what is the procedure??...is there is any RD approval required fr the same?

Ajay Mishra

Ajay Mishra (Expert)

03 September 2013 Hi

A special notice of a resolution to be moved at an annual general meeting for appointing an auditor other than the retiring auditor or removing of an existing auditor is given to the company in the manner as prescribed under the Act.

Application will be made to CG.

Ajay Mishra

Ajay Mishra (Expert)

03 September 2013
Requirement of special notice to the company:

Section 225(1) provides that special notice shall be to be given by a member and such special notice must comply with the requirements of section 190. Following two types of resolutions or notice may be given under section 225 of the Act:—
(a) resolution at an annual general meeting for appointment of a person other than a retiring auditor as auditor;

(b) resolution at an annual general meeting providing expressly that retiring auditor shall not be reappointed.

Special notice has to be given to the company at least fourteen days before the date of the meeting. The period of fourteen days is exclusive of both the day of meeting and the day of notice. Moreover, special notice has to be given fourteen days before the date of the original meeting and not adjourned meeting.

Thus, special notice received after the adjournment of original meeting cannot be taken and acted upon by a company.

In the case of Santosh Mani v New Delhi YMCA (1995) 19 CLA 178 (Del), it was held that even though the resolution moved by a shareholder not to re-appoint a retiring auditor failed to comply with requirement of section 188, yet since it was passed in annual general meeting when notice of resolution was given by company to all members and was carried by a majority, the same could be implemented.

The Department's Circular No. 5 of 1972, dated 21-2-1972 inter alia states that in view of section 225 special notice shall be required for a resolution appointing as an auditor a person other than the retiring auditor. Non-compliance with the provisions of the said section would render such a resolution illegal and ineffective.

Section 190 which provide a resolution requiring special notice applies to special notice under section 225

Ajay Mishra

Ajay Mishra (Expert)

03 September 2013

Intimation shall be given by the company to all members on receipt of notice or draft of resolution:

The company shall on receipt of a notice or draft resolution from a member give intimation of the same to all the members immediately and where it is not possible to do so then the company shall give notice to the members by advertisement in the newspaper circulating in the place of its registered office, not less than seven days before the meeting.

Ajay Mishra

Ajay Mishra (Expert)

03 September 2013
Intimation shall be given by the company to the retiring auditor:

On receipt of notice under section 225(1) of the Act, for the removal of a retiring auditor the company shall send a copy of the notice to the retiring auditor forthwith. The Department's Circular No. 2/81, dated 17-10-1981 states that in order to appoint a person other than the retiring auditor or to provide that the retiring auditor shall not be re-appointed; a special notice has to be given proposing that such a resolution would be moved at the next annual general meeting. On receipt of the special notice, the company should send a copy thereof to the retiring auditor. It is advisable to send the same by registered post with acknowledgement due.

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