Removal Or Change Of Auditor Of Company

After

incorporation of a company, the company is required to appoint a statutory auditor within 30 days to maintain compliance. The term of appointment of an Auditor can vary from 1 year to 5 years. In some cases, there maybe a requirement to change the Auditor of a company. In this article, we review the process for changing Auditor or removal of statutory Auditor of a company.

Removal of Auditor

The Companies Act, 2013 permits removal or change of auditor before the completion of his term. The process for removal of auditors by passing a special resolution, after obtaining the previous approval of the Central Government. Accordingly, the application for removal of Auditor prior to expiry of term must be made to the Central Government in Form ADT-2, within 30 days of passing of special resolution by Board of Directors for removal of the Auditor. On approval, the company is required to hold an Annual General Meeting within 60 days of the receipt of approval of the Central Government for passing the special resolution. The documents that must be filed with ADT-2 for removal of Auditor of a company.

Service request number of Form MGT-14
Date of filing the form
Date of passing the special resolution
Date of the annual/extraordinary general meeting

Resignation of Auditor

Another way to effect change of Auditor is for the existing Auditor of the company. An existing Auditor can resign by submitting a resignation letter to the Board of Directors. An auditor who has resigned from the company is required to file Form ADT-3 within a period of 30 days from the date of resignation, indicating the reasons and other facts as may be relevant with regard to the decision for resignation.

Change of Auditor

Auditors must be rotated or changed periodically every 5 years by the company to maintain compliance with the Companies Act, 2013. In such cases, special notice is required expressly stating that a retiring auditor shall not be re-appointed for a resolution at an Annual General Meeting for appointing as Auditor a person other than a retiring Auditor. Based on the special notice, the Auditor can make a representation in writing to the company, accepting the change or contesting, as the case maybe.

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Frequently Asked Questions

Common questions about Removal or Change of Company Auditor.

The Companies Act, 2013 permits removal or change of an auditor before the completion of their term. The process involves passing a special resolution by the Board of Directors for the removal of the auditor and obtaining prior approval from the Central Government. An application in Form ADT-2 must be filed with the Central Government within 30 days of passing the special resolution.

The documents that must be filed along with Form ADT-2 for removal of an auditor of a company include the service request number of Form MGT-14, the date of filing the form, the date of passing the special resolution, and the date of the annual/extraordinary general meeting.

Yes, an existing auditor of a company can resign by submitting a resignation letter to the Board of Directors. The resigning auditor is then required to file Form ADT-3 within 30 days from the date of resignation, indicating the reasons and other relevant facts for their decision to resign.

According to the Companies Act, 2013, companies must rotate or change their auditors periodically every 5 years to maintain compliance with the Act.

When the term of an existing auditor ends, the company must issue a special notice expressly stating that the retiring auditor will not be re-appointed. This special notice is required for a resolution to be passed at an Annual General Meeting for appointing a new auditor other than the retiring auditor.

Yes, based on the special notice issued by the company for appointing a new auditor, the retiring auditor can make a representation in writing to the company, either accepting the change or contesting it.

After obtaining the approval of the Central Government for removing an auditor before the completion of their term, the company is required to hold an Annual General Meeting within 60 days of receiving the approval for passing the special resolution.

No, the Companies Act, 2013 requires prior approval from the Central Government for removing or changing an auditor before the completion of their term. The application for removal must be made to the Central Government within 30 days of passing the special resolution by the Board of Directors.

The requirement to rotate or change auditors periodically every 5 years is to maintain compliance with the Companies Act, 2013, and to ensure independence and objectivity in the audit process.

The Board of Directors plays a crucial role in the process of changing or removing an auditor. They are responsible for passing a special resolution for the removal of an auditor, and the application for removal must be made to the Central Government within 30 days of passing this resolution.