Special Notice for Removal/Non-Reappointment of Auditor
# Special Notice for Removal of Auditor
## When is Special Notice Required?
Under Section 115 read with Section 140(4) of the Companies Act, 2013, a special notice is required for moving the following resolutions at the Annual General Meeting (AGM):
1. Appointing some other person as auditor in place of the retiring auditor; OR
2. Expressly providing that the retiring auditor shall not be re-appointed.
## Procedure on Receipt of Special Notice
### Step 1: Company Forwards Copy to Retiring Auditor
On receipt of the special notice, the company shall forthwith send a copy to the retiring auditor.
### Step 2: Retiring Auditor's Right of Representation
The retiring auditor may:
Make a written representation to the company (of reasonable length), AND/OR
Request the company to notify the representation to members, AND
Be heard orally at the meeting.
### Step 3: Company's Duty to Circulate Representation
Unless the representation is received too late, the company shall:
State in the notice of the resolution that a representation has been made; AND
Send a copy of the representation to every member to whom the notice is sent.
### Step 4: If Representation Not Sent (Too Late or Default by Company)
Without prejudice to the auditor's right of oral representation at the meeting:
The representation shall be read out at the AGM; AND
A copy shall be filed with the Registrar of Companies (ROC).
## Power of NCLT to Prevent Abuse
If, on an application by the company or any aggrieved person, the NCLT is satisfied that the right of representation under Section 140(4) is being abused by the auditor, the Tribunal may order that:
The written representation need not be sent to members; AND
It need not be read out at the General Meeting.
## Key Takeaway
The special notice procedure protects the auditor's independence by giving them an opportunity to be heard before being removed or replaced — while NCLT acts as a safeguard against misuse of this right.
Worked example
### Example 1
Example 1 — Standard Removal:
XYZ Ltd. wishes to appoint CA Riya in place of the retiring auditor CA Mohan at the upcoming AGM. A member gives special notice 14 days before the AGM.
Steps:
1. XYZ Ltd. must forthwith send a copy of the special notice to CA Mohan.
2. CA Mohan submits a written representation requesting circulation to members.
3. The company must state in the AGM notice that a representation has been made and send a copy to every member.
4. At the AGM, CA Mohan may also be heard orally.
### Example 2
Example 2 — Representation Received Too Late:
ABC Ltd. sends the special notice to retiring auditor CA Suresh. He submits a representation only 2 days before the AGM, after notices to members have already been dispatched.
Outcome: The representation cannot be circulated. However:
It shall be read out at the AGM, AND
A copy shall be filed with the ROC.
CA Suresh retains the right of oral representation.
### Example 3
Example 3 — Abuse of Right (NCLT Intervention):
The retiring auditor of PQR Ltd. submits a representation containing defamatory and irrelevant allegations against management. The company applies to NCLT under Section 140(4) proviso.
Outcome: If NCLT is satisfied the right is being abused, it may order that the representation need not be sent to members nor read out at the meeting.
⚠️ Common exam mistakes
Confusing 'special notice' (required from a member, served on the company at least 14 days before the meeting) with 'notice of the meeting' itself.
Forgetting that special notice is required BOTH when appointing a new person AND when expressly providing that the retiring auditor shall not be reappointed.
Assuming the auditor loses the right of oral representation if the written representation is not sent — the oral right is preserved regardless.
Thinking NCLT can be approached suo motu — the application must be made BY the company OR an aggrieved person.
Forgetting to file the representation with the ROC when it could not be circulated to members.
Not sending a copy of the special notice 'forthwith' to the retiring auditor — this is a mandatory immediate step.
Bare-Act text Section 140(4) read with Section 115 · The Companies Act, 2013 · click to expand
Section 140(4): (i) 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... (ii) On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the retiring auditor. (iii) 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 for it to do so, — (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 of the company to whom notice of the meeting is sent, and 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 (without prejudice to his right to be heard orally) require that the representation shall be read out at the meeting: Provided that if a copy of representation is not sent as aforesaid, a copy thereof shall 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.