Auditors – Appointment of ‑ Whether retiring auditor can be deemed to be re-appointed or automatically reappointed at general meeting - Companies Law - No. 5/72,

Circular : No. 5/72, dated 21 ‑ 2 ‑ 1972. Subject:- Auditors Appointment of ‑ Whether retiring auditor can be deemed to be re-appointed or automatically reappointed at general meeting The appointment/reappointment of auditors at the annual general meeting is one of the items of ordinary business to be transacted at such a meeting. As provided by section 224(2), at any annual general meeting a retiring auditor shall be reappointed except in four types of cases referred to therein. The expression shall be reappointed postulates some action on the part of the company resulting in the reappointment of the retiring auditor. The retiring auditor cannot be deemed to be reappointed or automatically reappointed at the annual general meeting. The passing of the resolution for the purpose at the annual general meeting seems essential for the reappointment of the retiring auditor who is still qualified and willing to act. [In this connection, the expression shall be appointed without any resolution being passed , used in the corresponding section 159(2) of the (English) Companies Act, 1948 may be noted by way of contrast]. Till this is done, a retiring auditor cannot be said to have been reappointed as contemplated by the section. In this view, it is not correct to say that in the absence of the resolution to the effect that the retiring auditors shall not be reappointed, the retiring auditors shall stand reappointed as auditors of the company. In view of section 225, special notice shall be required for a resolution appointing as an auditor a person other than the retiring auditor. Non-compliance with the provisions of the said section would render such a resolution illegal and ineffective. Government s power to appoint auditors under section 224(3) becomes available where at an annual general meeting no auditors are appointed or reappointed. Where auditors are not appointed or reappointed in accordance with the provisions of the Act including section 224(2), as read with sections 225 and 190, section 224(3) becomes attracted in the matter.