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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 followed:

A. Removal of auditor:

If 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.

Before taking any action, the auditor concerned should be given a Reasonable Opportunity of Being Heard.

Application 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.

Application has to be made within thirty days of the resolution passed by the board.

General meeting of the shareholders need to be conducted by the company within 60 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.

Check MCA site to find out what documents and information need to be included in Form ADT-2.

B. Resignation by Auditor:

In 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.

Where 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.

The 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 lakh. 

Check MCA site to find out what documents and information need to be included in Form ADT-3.

To find and consult with Corporate Lawyers / Advocates in India - visit LawRato's website.