Removal of retiring auditor (Section 2251)

A retiring auditor can be removed at the AGM by the following procedure:

1. Member must be given a special notice if 14 days (exclusive of both the day of notice
and day of meeting) in advance for the proposed resolution in the general meeting.
Copy of notice should be given to all the members.

2. A copy of the notice should be sent forward to the retiring auditor

3. The retiring auditor can make a representation. The copy of the representation should
be sent to all the members to whom notice of meeting is sent. If the copy of the
representation is not sent as it was received late or because of company’s fault, the
auditor must insist that the representation may be read at the meeting

4. If the company does not wish to send the representation to its members or read at the
general meeting, the company has to apply to Central Government. If Central
Government is satisfied that the right of representation is being misused by the auditor
to secure needless publicity for defamatory matter, the CLB may order that the auditor
should pay cost to the company for the circulation of his representation

5. If the new auditor accepts the position without first communication to the retiring
auditor, he will be deemed to be guilty of professional misconduct.

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Reproduced on the next page
Reproduction of Section 225 of the Companies Act, 1956

Provisions as to resolutions for appointing or removing auditors.

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225. (1) Special notice shall be required for a resolution at an annual general meeting
appointing as auditor a person other than a retiring auditor, or providing expressly that a
retiring auditor shall not be re-appointed.
(2) On receipt of notice of such a resolution, the company shall forthwith send a copy
thereof to the retiring auditor.
(3) Where notice is given of such a resolution and the retiring auditor makes with respect
thereto representations in writing to the company (not exceeding a reasonable length) and
requests their notification to members of the company, the company shall, unless the
representations are received by it too late for it to do so,—
(a) in any notice of the resolution given to members of the company, state the fact
of the representations having been made; and
(b) send a copy of the representations to every member of the company to whom
notice of the meeting is sent, whether before or after the receipt of the
representations by the company;
and if a copy of the representations is not sent as aforesaid because they were received too
late or because of the company’s default the auditor may (without prejudice to his right to
be heard orally) require that the representations shall be read out at the meeting :
Provided that copies of the representations need not be sent out and the representations
need not be read out at the meeting if, on the application either of the company or of any
other person who claims to be aggrieved, the 22[Central Government] is satisfied that the
rights conferred by this sub-section are being abused to secure needless publicity for
defamatory matter; and the 22[Central Government] may order the company’s costs on such
an application to be paid in whole or in part by the auditor, notwithstanding that he is not a
party to the application.23
(4) Sub-sections (2) and (3) shall apply to a resolution to remove the first auditors or any of
them under sub-section (5) of section 224 or to the removal of any auditor or auditors under
sub-section (7) of that section, as they apply in relation to a resolution that a retiring auditor
shall not be re-appointed.