Auditors ‑ Appointment of auditors other than retiring ‑ Expression “other than retiring” in the sub‑section ‑ Interpretation of - Companies Law - Circular : No. 22/76

Circular : No. 22/76 [35/4/76 ‑ CL ‑ III], dated 26 ‑ 7 ‑1976. Subject:-Auditors ‑ Appointment of auditors other than retiring ‑ Expression other than retiring in the sub ‑ section ‑ Interpretation of A point has been raised as to whether the words other than a retiring auditor occurring in section 225(1) should be mentioned in the special notice under section 225(1) while proposing a new person to be appointed as auditor and whether the words instead of him should be mentioned in the resolution passed in the annual general meeting appointing a person other than a retiring auditor as an auditor of the company under section 224(2)(c). The issue has been examined in detail and this Department is of the view that the provisions of section 225(1) or 224(2)(c) do not require that the words other than, a retiring auditor or instead of him should be specifically mentioned either in the special notice or in the resolution of the annual general meeting respectively. Since the reappointment of the retiring auditor is not automatic and a specific resolution for the reappointment of the retiring auditor is a must and in the absence of such a resolution the term of the retiring auditor shall automatically, come to an end at the conclusion of the annual general meeting, these words have no specific meaning attached to them. These words are suggestive only to indicate a new person and are not the mandatory requirement of law requiring these words to be included in the special notice under section 225(1) or in the resolution passed under section 224(2)(c). Thus, passing of a resolution in the annual general meeting appointing another person as an auditor of the company without mentioning the words instead of him is quite sufficient and valid under section 224(2)(c) and similarly a special notice proposing to move a resolution to appoint a new person as an auditor of the company without mentioning the words in place of retiring auditor is sufficient compliance under section 225(1).