Removal or Change of Auditor

Removal or Change of Auditor of Company

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.

  1. Service request number of Form MGT-14
  2. Date of filing the form
  3. Date of passing the special resolution
  4. 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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