07 February 2010
If the retiring auditor have expressed their UNWILLINGNESS to be re-appointed, should the company still go for 225 route and Special Notice to be given??
If answer is Yes, then the following points seems illogical
1. Before going through Section 225, pause a second at 224. The First Provisio to Section 224(1) says that the Company has to get in writing from the auditor that if appointed he will be within the limits prescribed under 224(1B), that is maximum limits.
If at this stage, the present auditor says, "Yes, I would like to be appointed", then 225 comes into picture. Only if the present auditor accepts the appointment and then the Shareholders are not interested in such auditor only then 225 will apply.
If you carefully see 225, it says, the notice has to be sent by the shareholder to the Company, that "I don't want this person as my auditor." When the auditor himself as refused to be reappointed where is the question of Shareholder wish of a different auditor.
Also, if you observe, it is said that the present auditor should be heard before appointing somebody else. What is the point in giving an opportunity to the retiring auditor if he has already expressed his unwillingness to be reappointed?.
So, to Come to Sec 225, first 224 hurdle (accepting to be reappointed) is to be crossed. So, when the retiring auditor expresses his unwillingness to be reappointed, there is no Scope of 225
Also, there are some technical lags
It says, Special Notice has to be given 14 days before the Meeting. How does the Shareholder know the Date of the Meeting??
For him to know the Date of the meeting, the company should have issued the regular AGM notice. Agreed?
If such regular notice has to be issued, then, are we not required to state the reappointment of auditor as an item.
So, in this case to go via 225, even though the retiring auditor has expressed his unwillingness, still we have to issue a notice and say, he is to be reappointed without getting the confirmation from him as state in 224(1) proviso??
So are we trying to say that we have to give a notice to shareholders that AGM will be conducted and retiring auditor is willing to be reappointed just for the sake that we can go to 225 and appoint somebody else.
Corporate Examples
1. Ranbaxy in 2007 - Ranbaxy's Directors recommended appointing BSR & Co as Walker Chandinik and Co expressed there unwillingness to be reappointed in 2007
2. Arvind Chemicals in 2008
Can someone please give me a bit more clarity. A simple one line answer is not what i require. Can someone counter the above points and say 225 is applicable.
08 February 2010
When the existing auditor expresses his desire not to be re-appointed, the Company is free to appoint any other auditor. The Board may propose a new auditor and get the members approval at the AGM. This is a practice followed commonly on a regular basis by all companies.
08 February 2010
Section-225 is applicable. Refer our old discussion Mr. Kumar.
Kindly interpret the second line of 225(1). You are appointing a person other than a retiring auditor which is covered by second line.
Section 225 has nothing to do with the reason. Why are you appointing a person other than a retiring auditor does not make any difference as far as applicability of section 225 is concerned.
Yes sir I remember, but you have not negated my points till date. Can you please negate it. There was no discussion early on sir. I was told that I was to go a far away to improve my Interpretation Skills. I take that as a good advice.
I beg to differ on the basis of my experience. We have changed auditors in listed companies and were not required to comply with all that has been stated in the original query.
08 February 2010
Mr. Rasheshshah sir, I didn't understand your view. I am saying 225 is not required when the existing auditor himself has expressed his unwillingness to be reappointed.
I did not understand what you have said. Do you say 225 is applicable or not
08 February 2010
Mr. Rasheshshah sir, just now linked you original post to now. Thank you sir. But is it possible for you to argue that 225 is applicable. Just for argument sake.
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