appaudit
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Appointment of auditors other than Retiring auditors
Applicable Provisions : Section 225 (Lexdocs 713)
Provisions in Brief :
A member of the company may serve a special notice of 14 clear days forappointing a person other than the retiring auditor or for expressly providing that
the retiring auditor shall not be re appointed.
Procedure and Documentation :
1. A member of the company will serve special notice on the company indicating his
intention to move a resolution at the next annual general meeting to appoint a
person other than the retiring auditor or providing expressly that a retiring auditorshall not be re-appointed. The special notice shall be given to the company at least
14 clear days before the meeting. [In the format provided to you]
2. On receipt of special notice, the company shall send a copy thereof to the retiring
auditor. [In the format provided to you]
It is advisable to send the same by registered acknowledgment due post. (Circular No.
2/81, dated 17th October, 1981)
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 18th November, 1969]
3. The retiring auditor after receipt of copy of special notice, has the right to makerepresentations in writing to the company and where practicable to call upon the
company to send a copy of the representation to every member of the company.
4. When the retiring auditor makes a representation, the company shall circulate the
same to all the members of the company, at least 7 days before the meeting, eitherindividually or by advertisement in two newspapers. If it is not possible to
circulate the representation to the members, the auditor may require the same to
be read at the meeting [In the format provided to you]
Where it is apprehended that the auditor's written representation is only to secure
needless publicity for defamatory matter, the company or any aggrieved person may
make an application to the Company Law Board, who, on such application, if satisfiedmay direct that the representation need not be circulated or read out at the meeting and
award costs against the auditor though the auditor is not a party to the application.
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5. Get a written certificate from the proposed new auditor to the effect that the
appointment, if made, will be in accordance with the limits specified in Section
224(1B).
6. In case of a listed company, send three copies of the notice of the general meeting
to the stock exchange. (Clauses 31(c) & (e) of listing agreement)
7. Notice of the general meeting shall be issued to the eligible members at least 21
clear days before the date of the meeting. If the special notice is received prior to
the despatch of notice then the notice should state about the special notice and thefact about representation, if any, made by the auditor concerned. A copy of the
representation shall be enclosed with the notice.
8. The general meeting shall be held to pass an ordinary resolution for appointment
of auditors other than the retiring auditors. [In the format provided to you]
9. In case of a listed company -
a) send a copy of the proceedings of the general meeting to the stock
exchange. (Clause 31(d) of listing agreement)
b) notify the stock exchange about the change in auditors. (Clause 30(c) of
listing agreement)
10. After appointment of new auditor, the company shall give an intimation to theauditor within 7 days of his appointment.
11. Within 30 days of the receipt of intimation from the company, the auditor shall
inform the Registrar in writing in Form No. 23B of Companies General Rules and
Forms that he has accepted or refused to accept the appointment.