Circular : No. 35/6/68‑CL‑III, dated 18‑11‑1969. Subject:-Appointment of auditors other than retiring auditors ‑ Non‑forwarding of notice to retiring auditors ‑ Consequence of The effect of non‑forwarding of notice under section 225(2) to the retiring auditors has been examined by the Company Law Bo - Companies Law - No. 35/6/68‑CL‑III,

Circular : No. 35/6/68 ‑ CL ‑ III, dated 18 ‑ 11 ‑ 1969. Subject:- Appointment of auditors other than retiring auditors ‑ Non ‑ forwarding of notice to retiring auditors ‑ Consequence of The effect of non‑forwarding of notice under section 225(2) to the retiring auditors has been examined by the Company Law Board in consultation with the Ministry of Law. The Board has been advised that such an omission would make the resolution for appointing or removing auditors illegal and ineffective. The object of section 225 is to see that a special notice of a resolution to be moved at an annual general meeting for appointing or removing an auditor is given to the company, that the retiring auditor receives a copy of the notice of such a resolution and that he shall have the right to make representations in writing to the company and, where practicable, to call upon the company to send a copy of the representation to every member of the company. The use of the expressions shall be required shall forthwith send , etc., occurring in the said section 225 show that the provisions of the section are mandatory in nature and must therefore be strictly complied with. Further any resolution requiring special notice must comply with the requirements of section 190. Contravention of the provision of section 225 would attract penalty to the company under section 629A. Further, if the new auditor, being a chartered accountant in practice, accepts the position as auditor previously held by a retiring auditor, being another chartered accountant in practice, without first communication with him in writing, the new auditor shall be deemed to be guilty of professional misconduct as contemplated by clause (8) of the First Schedule to the Chartered Accountants Act, 1949. Finally, if the appointment is accepted by the new auditor, without first ascertaining from the company whether the requirements of section 225 in respect of such appointment had been complied with, that would attract clause (9) of the First Schedule to the Chartered Accountants Act, 1949. The above views may be taken into account in supersession of any views expressed in the above matter earlier.