20 January 2008
APPOINTMENT OF STATUTORY AUDITORS OTHER THAN RETIRING AUDITORS* 181.1 Background note A company is free to appoint another auditor in place of the retiring auditor and provide expressly that the retiring auditor shall not be re-appointed. The proposal for appointment of some other auditor may emanate from the board or from the shareholder(s). In the case of Nidhi Companies the term of office is restricted to 5 years and a person other than retiring auditor shall be appointed. 181.2 Special Notice A special notice is required to be given to the company for a resolution appointing a person other than the retiring auditor as the auditor or for providing expressly that the retiring auditor shall not be re-appointed. 181.3 Intimation to auditor On receipt of the special notice, a copy thereof should be sent to the auditor. The copy of the notice should be sent to the retiring auditors by the registered A.D. post — Circular No. 2/81(1/1/81-CL-V) and 8/20 (225)/81-CL-V, dated 17-10- 1981. 181.3-1 Effect of failure to forward the notice to retiring auditors The effect of non-forwarding of notice to the retiring auditors will make the resolution for appointing or removing auditors illegal and ineffective — Circular No. 35/6/68-CL-III, dated 18-11-1969. *RELEVANT PROVISION : u Companies Act, 1956 : Section 225, Standard Listing Agreement. APPLICABILITY : ALL COMPANIES OTHER THAN GOVERNMENT COMPANIES AND DEEMED GOVERNMENT COMPANIES. 181.4 Circulation of representation made by auditor In case the concerned auditor makes any representation in writing (not exceeding a reasonable length) and requests the company to notify the same to the members of the company, the fact of receiving the representation should be stated in the notice of the meeting and a copy should be circulated to all the members. If it is received too late for inclusion in the notice or if there is an omission by the company, the representation should be read out at the meeting. 181.4-1 Exemption from circulation The company or the person who is likely to be affected may make an application to the Company Law Board1 seeking exemption from circulating or reading out the representations if the rights are sought to be abused to secure needless publicity for defamatory matter. The Company Law Board may make an order for exemption from reading out or circulating the same. Refer Chapter 186. 181.5 Obtaining written certificate Before appointing a new auditor, a written certificate must be obtained from the proposed appointee to the effect that the appointment if made, will be in accordance with the limits specified in Para 179.4-1. 181.6 General Meeting Resolution The General Meeting should accordingly be held and the resolution (Annex 181.1) appointing a person other than the retiring auditor as the auditor or for providing expressly that the retiring auditor shall not be re-appointed should be duly passed. 181.7 Intimation regarding appointment Within 7 days of appointment, an intimation () should be sent to the (new) auditor regarding his appointment. 181.7-1 Return of appointment Within 30 days of the receipt of intimation regarding appointment, the auditor should file a return in e-Form No. 23B () with the Registrar of Companies indicating that he has accepted/refused to accept the appointment. 181.8 Special provisions relating to listed companies In the case of a listed public company, the following requirements should be complied with. 1. The powers of Company Law Board in this regard shall stand transferred to Central Government when Companies (Second Amendment) Act, 2002 is brought into force. 181.8-1 Forwarding of minutes to stock exchange(s) A copy of the proceedings of the general meeting should be sent to each of the stock exchange(s) in which the securities of the company are enlisted. 181.8-2 Forwarding of minutes to stock exchange(s) A copy of the proceedings of the general meeting should be sent to each of the stock exchange(s) in which the securities of the company are enlisted. 181.8-3 Intimation to stock exchange(s) An intimation regarding change of auditors should be sent to each of the stock exchange(s) in which the securities of the company are enlisted. ANNEX 181.1 (Refer Para 181.6) AGM RESOLUTION FOR APPOINTMENT OF STATUTORY AUDITOR OTHER THAN RETIRING AUDITOR RESOLVED that Messrs......, Chartered Accountants, be and are hereby appointed Auditors of the Company in place of retiring auditors, Messrs.....to hold office until the conclusion of the next Annual General Meeting at a remuneration of Rs......[plus out-ofpocket expenses for actual travelling and other expenses in connection with Company’s audit]. Background note : u No explanatory statement is required as this being an ordinary business as per section 173(1)(a). u The following note, not amounting to explanatory statement, should accompany the notice : “A special notice in terms of section 190 of the Companies Act, 1956, has been received under section 225(1) from a member proposing the appointment of Messrs......, Chartered Accountants, as Auditors of the Company in place of Messrs......, the retiring auditors of the Company. The retiring auditors have informed the Company that they have no representation to make for notification to the members of the Company relating to special notice. The retiring auditors, being eligible, have offered themselves for re-appointment.”
10 August 2008
Thank you Mr. Jain for replying my query. One point I want to know whether it is mandatory for new auditor of a private limited company to intimate in form 23B to ROC. please reply in the following mail i.d debrajib.sla@gmail.com
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