Opinion Of Eminent Legal Luminaries On Controversial Issues

Can Retiring Auditor Be Reappointed?

QUERY: A member has sent a special notice under section 190(I) of the Companies Act, 1956 well within clear 14 days proposing a name of Auditor to be appointed for the current year in place of retiring auditor with a draft resolution. The company has not taken any action on the notice and filed it intimating that no action can be taken on the notice and referred to section 188 of the Act not been complied with.

Whether retiring auditor can accept the appointment as auditor of the company and that the retiring auditor was well aware of the stand of the company not taking any action on the special notice served by a member of the company.
ANSWER: First of all, a notice sent by a member under section. 190 of the Companies Act was not proper. A special notice under section 225 of the Companies Act ought to have been served for a resolution that an ensuing general meeting a person other than retiring auditor should be appointed.

So, irrespective of the fact that the retiring auditor was well aware of the notice under section. 190 of the Act, he could automatically be reappointed under section 224(2)(c) of the Act, which reads as under”

“Subject to the provisions of sub-section (1B) of section 224A, at any annual general meeting, a retiring auditor, by whatever authority appointed shall be reappointed unless –

a) ----

b) -----

c) A resolution has been passed at that meeting appointing somebody instead of him or providing expressly that he shall not be reappointed, or

d) --------“

So, provision for reappointment of retiring auditor is a step in the direction of providing him a degree of independence as he cannot be replaced except in the specific circumstances mentioned under section. 224(2) of the Act.

Posted in Company Law
One comment on “Can Retiring Auditor Be Reappointed?
  1. Shankar says:

    auditor who has completed his term is not  eligible for re-appointment  in the same company for five years from the completion of his term (Section 139)

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Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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