Remoavl of auditor

[Neena Deshpande]

Dear Members,

 

Can we remove a statutory auditor in an EGM, thru ordinary resolution by giving a special notice? or is it required to wait till AGM only? Please quote the relevant section of companies act also.

 

Thanks

 

Neena

 

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[Prakash B]

Dear Neena,

 

As per my understanding, Auditor can be removed in EGM. Since appointment of Auditor other than retiring Auditor in AGM cannot be called as Removal, it is just Non-re-appointment.

 

Please read section – 224(7) alongwith 225, which will assist you, in this regard.

 

a)    Application to RD u/s 224(7) (Prior Approval of RD)

b)    Special Notice U/s 225(1)

c)    Service of Notice to Auditor and obtain the Auditor’s representation.

 

Any other views are invited.

 

Regards

Prakash B

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[urvashi pradhan]

 

Yes, a statutory auditor may be removed before the expiry of his term at a general meeting (EGM or AGM) by passing an ordinary resolution for the purpose. This however, is subject to obtaining Regional Director's approval for the removal. Pls refer to sec. 224(7) of the Companies Act.

 

Special notice under sec. 225(1) is not necessary for a resolution to remove an auditor from office before the expiry of his term in a general meeting.

 

Thanks & Regards,

Urvashi Pradhan.

 

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[Jayashree Chandrasekaran]

Dear Ms.Urvashi,

The opening words of Sec225(7) is Except as provided in the proviso to sub-section (5)....that is in situation which is not covered by sub-section (5)...Hence the procedure for removal of auditor in EGM or AGM requires special notice.

Jayasree

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[urvashi pradhan]

Dear Ms. Jayashree,

 

That I believe, is subject to interpretation.

 

While the provisions of sec. 225(3) regarding the auditor's right of making a representation holds good even in a case where he is being removed before the expiry of his term under sec. 224(7), the applicability of sec. 225(1) pertaining to requirement of Special notice is excluded by sec. 225(4) with respect to removal of auditor under sec. 224(7). As such, the company can just inform the auditor without there being a need for a special notice.

 

However, your view is well appreciated.

 

Thanks & Regards,

Urvashi Pradhan.

 

[Neena Deshpande]

 

After reading 224 (5), (7), 225, my interpretation is as follows:

 

224 (5) deals with appot of first auditor only. The proviso to Section 224 (5) allows the members to remove the first auditor in general meeting and appoint any other person as first auditor.

 

224 (7) says except as provided in the proviso to sub section 5, any auditor appointed u/ 224 can be removed in general meeting with RD's apporval. So section 224 (7) does not apply to first auditor but to subsequent auditors.
 

Hence RD's approval is a must for removal of auditor except first auditor.

 

 

Correct me if I am wrong.

 

Neena
 

On 3/30/10, Jayashree Chandrasekaran <jayash...@gmail.com> wrote:

[SUNIL KUMAR B.G.]

Dear All,

Where an auditor appointed;

• in the AGM or
• by the board to fill a vacancy, or
• appointed by the CG may be removed from the office before expiry of his term by the company in GM after obtaining previous approval of the CG (RD) in that behalf. 

The special notice does not arise in this case.


Warm Regards,

Sunil Kumar B.G.
Practicing Company Secretary
B.B.M.,A.C.S.
Mysore
+91-9945653732
http://cssunilbangerabg.blogspot.com/

[RAJESH]

Dear All,   In my opinion a Spl Notice is required for the removal of an Auditor be it under Sec.224(5) or under Sec.224(7), since sub-section 4 of Sec.225 equally applies the provisions of sub-sections (2) and (3) of Sec 225 to sub-section (5) of Sec.224 and also to sub-section (7) of Sec.224.  Thus, Spl Notice is required irrespective of the fact that the auditor being removed is the First Auditor or Subsequent Auditor.   Rgds N. RAJESH M.Com, LL.B, DCS, CS Qualified. Malleshwaram Bangalore 9986730882 --- On Tue, 30/3/10, urvashi pradhan <urvashi...@gmail.com> wrote:

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[Jayashree Chandrasekaran]

I agree with Mr.Rajesh...the approval of RD comes in only in specific cases,...otherwise it is only ordinary resolution with special notice

Jayashree

[venkatesh c.m]

Dear All,

Yes RD approval comes only in certain cases hence ordinary resolution would be enough.

[RAJESH]

Dear All,   RD appoval is required for all removals except the removal of First Auditors.  Even in cases where prior RD approval is contemplated Spl Notice is required.  In my opinion Spl Notice is required in any removal, be it the removal of first auditors or the removal of other auditors. Rgds N. RAJESH

M.Com, LL.B, DCS, CS Qualified.

S.Kedarnath & Associates Malleshwaram Bangalore 080-23560101 --- On Wed, 31/3/10, venkatesh c.m <venkatesh...@gmail.com> wrote:

[chakri hegde]

I have contrary view on this issue........

As rightly pointed out by Mr Sunil,  Auditors other than First Auditors can be removed only after obtaining the the PRIOR approval from the Central Government ( the power has been delegated to Regional Directors)

Special Notice is not required required in this case..............  

Prior Approval of the CG is required before actually removing the Auditor, even though the Resolution for such removal can be passed before.

However, for removing the First Auditor, Central Government Approval is not required.

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With Best Wishes
Chakri G Hegde
Nissin Foods India Ltd.
Bangalore

[urvashi pradhan]

 

Hi All,

 

I think someone who's had practical experience in the matter can comment for us and put this debate to rest :)

 

Thanks & Regards,

Urvashi Pradhan

 

[monika sharma]

First Director appionted by Board of Directors of the Company and can be removed in the General Meeting and it does not require Central Goverment approval . This may done in EGM.

According to clause (a) of he proviso to sub section ( 5) , to remove the first auditors, no special Notice is required under Section 225(1)

Regards,

Monika Sharma 

[Sachidananda Ganapathi Bhatta]

hi all

As section 225 only mentions about the word "auditor". Section  does  not specifies first auditor of subsequent auditor, hence special notice is required for removal of auditor

Thank

Sachidananda B.G 

[PAVAN G]

Dear Monika,

 

Question is about Removal of Auditors and not Removal of First Directors.

 

Hope its only typo error

 

Regards,

 

Pawan

[avinash as]

DEAR ALL.. Removal of first auditor before his tenure doesnt require
the approval of RD but removal of subsequent auditor before his tenure
approval of RD is required.. And special notice has to be given in
every case..
regards
Avinash

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Regards
Avinash

[avinash as]

DEAR ALL.. Removal of first auditor before his tenure doesnt require
the approval of RD but removal of subsequent auditor before his tenure
approval of RD is required.. And special notice has to be given in
every case..
regards
Avinash

On 3/31/10, RAJESH <rajesh_...@yahoo.co.in> wrote:
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Regards
Avinash

[monika sharma]

Yes. It was typo error .

 

Acording to me,  no special Notice and CG approval is required in respect of removal of First Auditors whereas approval of CG (delegated to RD) by filing Form 24A and Special Notice is required incase of removal of any other auditors.

 

Please Refer Chandratre's, Page no 3123  

 

Regards

Monika

[Ramya Jnanesh]

Dear all,

 

An auditor can be removed before expiry of his term only by the company in general meeting after obtaining the previous approval of the Central Government(RD).

 

In the case of Devinder K. Jain v Union of India ( decided on 8.3.2007) decision to remove the auditor was taken on 12.7.2004 at the Board Meeting, which had no effect until and unless prior approval of the CG and Subsequent confirmation in the GM was granted.

CG approval is not required for removal of the first auditors appointed by the Board of Directors at the first AGM ( 227(5))

U/s 224(7) Except as provided in the proviso to Sec 224(5) , any auditor appointed under this section may be removed from office before the expiry of his term only by the company in GM, after obtaining the Previous approval of the CG in that behalf.

 

Regards,

Ramya H.C

[venkatesh c.m]

Dear All,

In continuation wit Ramya's note as mentioned CG ' s power has now been delegated to R D hence Approval from R D has to be obtained and than placed before the AGM.

Regards,
venkatesh.mallabadi

[n garg]

Dear there is no need to play such kinf of the drama. kindly go through the simple procedure. Say to the auditor to resign on the ground of negotiation of remuneration. Appoint the other in EGM and approve.