Start with how the auditor's office is ending
Section 140(4) of the Companies Act, 2013 generally requires special notice for an AGM resolution appointing a person other than the retiring auditor or expressly deciding not to reappoint the retiring auditor. The stated exception applies when the retiring auditor has completed the consecutive five- or ten-year tenure, as applicable, under section 139(2). Establish whether that provision applies to the company and auditor before taking the exception. Mid-term removal is a different procedure under section 140(1), involving prior Central Government approval, a special resolution and an opportunity to be heard.
Read the applicable text: Companies Act, 2013, sections 115 and 139–140 ICSI reproduction of the Rule 23 amendment and amended threshold.
Check the special-notice process separately
Read section 115 and Rule 23 of the Companies (Management and Administration) Rules, 2014. Check that the qualifying member or group signed the notice and verify the voting power or the alternative paid-up-share test as at the date of notice. The prescribed tests are at least 1% of total voting power or shares on which an aggregate of at least ₹5 lakh has been paid up. Notice to the company is not earlier than three months and must be at least fourteen clear days before the meeting. Immediately after receipt, give members notice of the resolution in the same manner as notice of general meetings, allowing at least seven clear days between dispatch and the meeting. If that manner is impracticable, publish in both an English and a vernacular newspaper with wide circulation in the State of the registered office at least seven clear days before the meeting, and post it on the company website if it has one. Keep the resolution threshold separate: special notice is a procedure, not by itself a requirement for a special resolution.
Send the notice to the retiring auditor forthwith
Section 140(4)(ii) requires the company to send a copy on receipt. If the auditor makes a written representation of reasonable length and requests notification to members, the company must, unless received too late, state the fact of the representation in its resolution notice and send the representation to members receiving meeting notice. Include recipients whose meeting notice went out before or after the company received the representation.
Handle a missed circulation without erasing the record
If circulation did not occur because of late receipt or company default, the auditor may require the representation to be read at the meeting, without prejudice to the right to be heard orally. The section also requires filing a copy with the Registrar if a copy was not sent as prescribed. A Tribunal order may disapply sending or reading where the right is abused; retain and follow the actual order rather than deciding unilaterally to suppress the representation.
Close the succession file
Keep the current appointment and tenure record, special notice and service proof, both sets of communications, any representation and the minute entry. Verify the proposed appointee's consent, eligibility and selection requirements under the applicable provisions. Check the filing obligations for the actual decision; do not reuse a resignation or mid-term removal form simply because a different auditor will serve next.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Immediate referral to the retiring auditor
The company receives a qualifying notice on 15 September and forwards the copy on 18 September. The log shows a three-day gap. Section 140(4)(ii) uses a promptness requirement, not a three-day allowance; investigate the delay and document the response.
Illustrative example 2: Paid-up alternative
Members have 600 of 100,000 votes, or 0.60%, but their shares have ₹5.40 lakh paid up in aggregate. The alternative clears ₹5 lakh by ₹40,000, assuming the records substantiate the paid-up amount.
Illustrative example 3: Fourteen clear days
The company receives qualifying notice on 15 September for an AGM on 30 September. Excluding both endpoints, 16–29 September gives fourteen clear days. Receipt on 16 September instead leaves thirteen.
Illustrative example 4: Partial representation circulation
The company sent the meeting notice to 96 members. A timely written representation requesting notification reaches 90 of them. There are six missing recipients; if the omission persists, consider the read-out and Registrar-copy requirements rather than treating the notice distribution as complete.
Illustrative example 5: Firm completes statutory rotation
Assume the company and audit firm are covered by section 139(2) and the firm completes two consecutive five-year terms. The resulting ten years meet the tenure limb of the section 140(4)(i) exception; record the appointment history and separately complete the successor process.
Illustrative example 6: Track recipients across dispatch batches
Meeting notices went to 58 members before the written representation arrived and to 22 afterwards. If timely circulation is required on these facts, reconcile the representation distribution against all 80 meeting-notice recipients, including the first 58.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the type of transition | Appointment history and current office status |
| 2 | Check whether section 139(2) applies | Company class and tenure record |
| 3 | Confirm the resolution's trigger | AGM agenda and proposed text |
| 4 | Validate member eligibility | Voting register and paid-up amount schedule |
| 5 | Calculate both notice windows | Dated calendar and service evidence |
| 6 | Send the notice to the auditor immediately | Dispatch and delivery proof |
| 7 | Track the representation and member circulation | Time-stamped communications and recipient list |
| 8 | Record any read-out or oral hearing | Chair script and minutes |
| 9 | Handle any Registrar filing or Tribunal direction | Filing proof or sealed order |
| 10 | Validate successor and close the action log | Consent, eligibility evidence and filing schedule |
Sixteen practitioner FAQs
1. Is an auditor's resignation the same as retirement at the AGM?
No. Establish the event first and apply its own procedure.
2. Does section 140(4) authorise removal before the term ends?
No. Use the separate section 140(1) process for removal before expiry.
3. Is special notice needed for an express decision not to reappoint?
Generally yes, subject to the stated statutory tenure exception.
4. Does every five-year appointment trigger the exception?
No. Establish that the tenure referred to in section 139(2) applies and was completed.
5. Is special notice itself a special resolution?
No. Notice procedure and voting threshold are separate questions.
6. Can member eligibility be tested solely by headcount?
No. Test voting power or the prescribed paid-up amount.
7. Do fourteen clear days include the meeting date?
No. Exclude the notice day and meeting day.
8. When is the notice sent to the retiring auditor?
Forthwith on receipt under section 140(4)(ii).
9. Does a written representation automatically dispense with an oral hearing?
No. The statute preserves the auditor's right to be heard orally.
10. What should the company's resolution notice say if the representation is timely?
It should state that the representation was made and the company should send the copy as required.
11. What about members who already received the meeting notice?
They are included in the representation circulation requirement.
12. Can a late representation be ignored altogether?
No. Consider the read-out right and the filing obligation where the copy was not sent.
13. Who can decide abuse of the representation right for dispensing with sending or reading?
The Tribunal can make the relevant order under the statutory proviso.
14. Does the exception settle successor eligibility?
No. Check consent, disqualifications, appointment procedure and filing separately.
15. Is auditor non-reappointment equivalent to filling a casual vacancy?
No. Determine the event and its statutory route.
16. What evidence should the chair retain?
The notices, service records, representation treatment, any Tribunal order and minute entry.
Official sources
Companies Act, 2013, sections 115 and 139–140 ICSI reproduction of the Rule 23 amendment and amended threshold ICSI: consolidated text of Rule 23, including the notice and publication requirements Gazette on India Code: Companies (Management and Administration) Amendment Rules, 2015, G.S.R. 669(E)