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Procedure for Removal of Auditor under Companies Act 2013
Section 140 of Companies Act, 2013
deals with the Removal of Auditors
The procedure is as
A. Removal of auditor:
the Removal of Auditor is done before the expiry of his term (i.e. five years), it
has to be done only by passing a Special
Resolution by the company after obtaining
previous approval from Central Government.
taking any action, the auditor concerned should be given a Reasonable Opportunity of Being Heard.
to the Central Government has to be made in Form ADT-2 as laid down in Rule
7 of the Companies (Audit &
Auditors) Rules, 2014. The same form shall be accompanied by a fee which is prescribed under Section 12 of Companies (Registration
offices & Fees) Rules, 2014.
has to be made within thirty days of the
resolution passed by the board.
company shall hold the general meeting
within sixty days of receipt of approval of the Central Government for
passing the special resolution.
Removal of Auditor by
Special Resolution will be
considered as Special Business for Section 102 of the Companies Act, 2013.
Form ADT – 2 requires the following
indicating the grounds for seeking removal of auditor.
the accounts have been qualified during last three years (if yes, give details).
of opportunity given to auditor concerned for being heard.
any civil or criminal proceedings are pending between the company and the
concerned officers. Yes / No. If yes, give complete details.
of appointment of the concerned auditor and SRN of notice of his appointment
and period for which the auditor was appointed.
any special notice has been received for removal of auditors. Yes or No. If
yes, the date of receipt of notice and the percentage of capital held by the
members giving such notice or percentage of the number of members in case of
company limited by members.
all due audit fee has been paid to the concerned auditors. If no, mention the
amount of arrears.
of other services been rendered by such auditors to the company.
of Audit i.e, number of financial years for which audit is pending.
of accounts of the company for each of such financial year i.e, yet to be
approved by the Board or approved by the Board but yet to be handed over to
auditors or approved by the Board, handed over to auditors but audit not yet
completed or audit completed, draft report not yet given by the auditors.
Whether there is any
dispute with regard to the Books of Accounts in the possession of auditors but
not delivered back to the company. Yes or No.
B. Resignation by Auditor:
case the Auditor has resigned from the company he shall file a Form ADT-3 of the Companies (Audit & Auditors) Rules, 2014 within thirty days from
the date of resignation.
the company is a Government Company or
other company owned or controlled, directly or indirectly by the Central
Government, the auditor shall also file
a statement with the Form ADT-3 with the Comptroller and Auditor General of India
(who appointed him in this case), indicating the reasons and other facts as may
be relevant with regard to his resignation.
onus to file such statement containing relevant facts and reasons for
resignation is on the resigning auditor and it is punishable
with monetary fine which could be minimum Rs. 50,000 and Maximum Rs. 5
Form ADT–3 require following information:
of Auditor Individual/ Firm:
Tax PAN of auditor or auditor’s firm.
of the auditor or auditor’s firm.
Number of auditor or auditor’s firm’s registration number.