# Special Notice for Removal or Non-reappointment of Auditor

Section 140(4), read with Section 115, lays down a special procedural safeguard when members propose to not reappoint the retiring auditor at an AGM or appoint someone else in his place.

## When is special notice required?

A special notice under Section 115 is required for a resolution at AGM:

1. Appointing some other person as auditor in place of the retiring auditor; OR

2. Providing expressly that the retiring auditor shall not be re-appointed.

## Procedure step by step

### Step 1 — Company receives special notice

Upon receipt of the special notice, the company shall forthwith send a copy of the notice to the retiring auditor.

### Step 2 — Auditor's right of representation

The retiring auditor may:

Make a written representation to the company (of reasonable length), AND
Request the company to notify it to the members
Additionally, he has a right of oral representation at the meeting

### Step 3 — Company's obligation to circulate WR

Unless the WR is received too late, the company shall:

1. State in the notice of resolution that a representation has been made.

2. Send a copy of the representation to every member.

### Step 4 — If WR not sent to members (because received late OR company defaults)

The auditor may have the WR read out at the AGM, without prejudice to his right of oral representation.
A copy of the WR shall be filed with the ROC.

## Abuse of right — NCLT's power

If the NCLT is satisfied (on the company's or any aggrieved person's application) that rights under Section 140(4) are being abused by the auditor (e.g., to secure needless publicity for defamatory matter), the NCLT may order that:

The written representation need not be sent to members.
The auditor need not be allowed to read it out at the GM.

## Diagrammatic flow

```

Special notice (S.115) → Company → forward copy to auditor

↓

Auditor sends WR + asks to circulate

↓

If timely → notify members + circulate WR + right of oral rep

If late or defaulted → read out at AGM + file with ROC

↓

Abuse? → NCLT may dispense with WR circulation/reading

```

Worked example

### Example 1

Example 1:

A member sends special notice to ABC Ltd. proposing that retiring auditor Mr. Z shall not be re-appointed. What must the company do upon receipt?

Answer: The company shall forthwith send a copy of the special notice to Mr. Z. Mr. Z may make a written representation and request the company to notify it to members.

### Example 2

Example 2:

The retiring auditor's WR is received by the company only one day before the AGM, leaving no time to circulate it to members. What are the auditor's rights?

Answer: The company is not obliged to circulate the WR (since it was received too late). However, the auditor may require the representation to be read out at the AGM, and his right of oral representation remains intact. A copy of the WR shall be filed with the ROC.

### Example 3

Example 3:

ABC Ltd. believes its retiring auditor is using the right of representation to publish defamatory content. What remedy is available?

Answer: The company (or any aggrieved person) may apply to NCLT under Section 140(4). If NCLT is satisfied of the abuse, it may order that the WR need not be sent to members and need not be read out at the AGM.

⚠️ Common exam mistakes

Forgetting that special notice (Section 115) is required — not just an ordinary resolution.
Believing the auditor loses oral representation rights when WR is not circulated — oral rights are independent and preserved.
Not knowing the NCLT remedy for abuse of representation rights.
Confusing this with removal under Section 140(1) — Section 140(4) deals with non-reappointment, not mid-term removal.

Bare-Act text Section 140(4) read with Section 115 · Companies Act, 2013 · click to expand

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... On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the retiring auditor. Where notice is given of such a resolution and the retiring auditor makes with respect thereto representation in writing to the company (not exceeding a reasonable length) and requests its notification to members of the company, the company shall, unless the representation is received by it too late, (a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and (b) send a copy of the representation to every member... If a copy of the representation is not sent as aforesaid because it was received too late or because of the company's default, the auditor may require that the representation shall be read out at the meeting. Provided that copy of the representation shall also be filed with the Registrar. Provided further that if the Tribunal is satisfied on an application either of the company or of any other aggrieved person that the rights conferred by this sub-section are being abused by the auditor, then, the copy of the representation may not be sent and the representation need not be read out at the meeting.

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Special Notice for Removal / Non-reappointment of Auditor (Section 140(4))

Worked example

⚠️ Common exam mistakes