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Removal of Auditor u/s 225

meenu (cs) (416 Points)

04 July 2009

Hi All,

This is with regarding appointing new auditor in place of the retiring auditor in the AGM.

Kindly clarify the following points:

1. Whether the ordinary resolution to be passed at AGM is to be considered as special business or ordinary business?

2. Whether Ex St u/s 173 is to be given or not?

3. whether special notice received by the member proposing thr resolution to remove the retiring auditor and appoint new in his place is to be given to the members of the com[pany apart from the notice of the meeting?

Views are solicited on this forum.

Urgent.

Best Regards,

Meenu Jha

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26 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 04 July 2009

Hi Meenu,

Point 1: You need to pass ordinary resolution at AGM and it is to be considered as ordinary business as required by Section 173. But as per Section 225 (1) Special Notice shall be required. Go through Section 225(1) throughly.

Point 2: Explanatory Statement u/s 173 shall not be required as it is an ordinary business.

Point 3: No. You don't need to share the special notice received from shareholder with other member but send a copy of such notice to the retiring auditor.

But it is duty of the company to send a copy of the representation made by the retiring auditor to every member of the company.

Give a reading to section 225 throughly.

Best Regards

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meenu (cs) (416 Points)
Replied 04 July 2009

Thnxs Sir for your Reply.

Kindly clarify whether Sec 173(1)(a)(iv) covers the appointment of new auditor by removing the retiring auditor.If yes, then it covers under ordinary business.

Secondly under section 190(2) it is clearly given to present special notice of the resolution to the members as notice of the meeting.or to advertise it. This is as per M.C. Bandari also

Kindly clarify the issues.

Best Regards,

Meenu

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 04 July 2009

Hi,

Yes Sec 173(1)(a)(iv) covers the appointment of new auditor by removing the retiring auditor and it is an ordinary business reason being Sec 173(1)(a)(iv) makes no difference between normal appointment of auditor and appointment of auditor as in your case.

Such special notice is required to be prepared by you in your language covering all the relevant points to comply section 190(2).

Best Regards,

meenu (cs) (416 Points)
Replied 06 July 2009

Sir,

Thank u again for your appropriate views on this topic.

So as per our discussion on this forum

1. Appointment is to be taken as Ordinary business with no explanatory statement.Just the Company mention in note about the Special Notice.

2. To send the intimation & contents of Special notice to all the members.

Kindly clarify whether the company should despatch the notice along with the notice of the meeting or should send separetly to all indvidual or either to publish in newspaper.If the Company don't go for the advertisement of the same then what pratice should be followed?

Kindly clarify the point 2 for my reference pls.

Best Regards,

Meenu Jha

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 July 2009

Hi Meenu,

As per the language used by Section 190(2) you should simply dispatch the special notice along with the notice of the meeting and there is no need to send it separately to all members.

Publication of special notice in newspaper is required only if the dispatch the special notice along with the notice of the meeting is not practicable. Read Section 190(2) carefully.

Best Regards,

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meenu (cs) (416 Points)
Replied 06 July 2009

Garg Sir,

Thanks for your requisite clarification for the same subject matter.

Sir, pls also clarify that special notice is to be provided by the member. Is there any specified limit of holding that member should hold or majority shareholder can give special notice? If majority holder is promoter itself then whether the next majority holder can give notice to the Company?

Pls. Expedite.

Best Regards,

Meenu Jha

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 July 2009

Hi Meenu,

Kindly observe initially special notice may be given by any one member to the company to initiate the process i.e. removal of auditor etc. After receiving that special notice from that member it is duty of the company to provided such notice to every members by the company irrespective of his/her holding percentage in the company as desired by section 190(2) and section 225.

Once again I am requesting you to please go through the language of Section 190(2) and try to figure out the correct interpretation of section as everything is clearly mentioned there.

Hope I am able to bring some clarity.

Best Regards,

meenu (cs) (416 Points)
Replied 06 July 2009

Sir,

I further clarify my query which was not well versed.Its not related to the percentage of holding of members to whom notice is to be given.

Kindly note that:

Special notice is given by any member to the Company.My query further to this includes whether the member presenting special notice should hold any specific percentage of holding?

Trust this clarifies.

Best Regards.

Meenu

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 06 July 2009

Special Notice can be given by any member, irrespective of his holding, not less than 14 days before the meeting excluding the day of serving of notice and the date of meeting and the Company shall not less than 7 days before the date of meeting give notice of the resolution for the same in the same manner as it gives notice to the members if it is not practicable it may also advertise the notice thereof in newspaper. Thus circulate it to the members is not necessary but notice for the same is necessary. However circulate the copy of such notice to the retiring auditor is necessary. And the representation of retiring auditor is to be send to every member of the company and if it is not praticable it may be readout at the meeting or if it is prejudicial to any other person's claim it is not necessary to send or read such representation.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 06 July 2009

Dear Meenu,

I think the law is very specific there is no confusion that notice can be given by any member.

Now what do you mean by "should hold any specific percentage of holding?"

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 06 July 2009

Hi Meenu,

Any shareholder holding 1 share may give special notice.

In other words there is no such requirement that member presenting special notice should hold any specific percentage of holding.

Best Regards

meenu (cs) (416 Points)
Replied 06 July 2009

Sir,

If the representation is not to be even read in the AGM then how to proceed with the Central Govt?

Meenu

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 06 July 2009

Dear Meenu,

The Act is silent in this regard thus as Mr. Ankur Garg specified a shareholder holding only 1 share may give special notice for the same.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 06 July 2009

The company or the person who claim to be agrieved is required to make an application to the Central Government and if the Cent. Govt. is satisfied that the right conferred by this section are being abused to secure needless publicity for defamatory matter, the company is not required to read the representation in the General Meeting also.