Introduction

Handling the intricacies of a resignation of auditor is a challenging undertaking that necessitates a thorough comprehension of many legal and procedural facets. An auditor’s departure creates a number of company regulatory compliances and vacancies that need to be filled as soon as possible, regardless of the reason—personal reasons, conflicts of interest, professional code of conduct violations, or other obligations taking precedence.

1. Relevant Section: Companies Act of 2013 Section 140(2)
2. Rule 8 of the Companies (Audit and Auditors) Rules, 2014 is applicable.

Documents that must be submitted to ROC for Resignation of Auditor

• ADT-3:—by the auditor within 30 days following the resignation date.

• MGT-14: Within thirty days from the date of the EGM, at which the Company accepted the auditor’s resignation

• ADT-1: within 15 days following the Company’s appointment of a new auditor.

• Legal Provisions: (Read Section 139(8)(i) and Section 140 (2) together.)

Section 140(2) of the Companies Act 2013 states that an auditor who resigns from the Company must file a statement in the prescribed form with the Company and the Registrar within thirty days of the resignation date. 

Suppose the Company is one of the companies mentioned in sub-section (5) of Section 139. In that case, the auditor must also file a statement with the Comptroller and Auditor-General of India outlining the reasons for his resignation and any other pertinent information.

Section 140(3) states that the auditor may face penalties with a file worth up to five lakh rupees, although the fine must not be less than fifty thousand rupees for failure to comply with subsection (2).

Section 139 (8) The temporary opening in the auditor’s position will be filled by:

• If a company is not required to have its accounts audited by an auditor appointed by the Comptroller and Auditor-General of India, the Board of Directors will fill the vacancy within 30 days. 

However, suppose the resignation of auditor is the reason for the casual vacancy. In that case, the Company must also approve the appointment at a General Meeting called within three months of the Board’s recommendation. The appointed individual will serve in this capacity until the next Annual General Meeting concludes.

• Be filled out by the Comptroller and Auditor-General of India within 30 days if a company’s accounts are audited by an auditor they have hired.

(If the Comptroller and Auditor-General of India does not fill the position within the allotted time, the Board of Directors will do so within the next thirty days.)

Regulation 8 of the 2014 Companies (Audit and Auditors) Rules for Resignation of Auditor

Auditor resignation: To comply with section 140’s sub-section (2), an auditor who has left the Company must submit a Form ADT-3 statement.

Crux: An auditor leaving the Company must file a statement in Form ADT-3 with the Registrar of Companies within thirty days of the resignation date.

The events leading up to the company auditor’s resignation are as follows:

1. The auditor will submit a letter of resignation to the Company along with form ADT-3, which they have filed with the Registrar of Companies.
2. Following that, the Company will call a board meeting to accept the auditor’s resignation.
3. Following the auditor’s resignation, the Company will appoint a temporary replacement and approve the notice of an extraordinary meeting, either during the abovementioned meeting or by calling a new board meeting.
4. Call an EGM to approve the hiring of a new auditor.
5. Within 30 days following the date of the EGM, submit Form MGT-14 to the ROC.
6. Within 15 days after the new auditor’s appointment, submit Form ADT-1 for his appointment.

What Should We Do During the Resignation of Auditor?

In order to provide comprehensive services and guarantee that your business complies with all regulatory standards, you can consult our knowledgeable team while negotiating the complications of an auditor’s resignation and the subsequent filing of the casual vacancy caused. How we may help your organization is as follows:

• Drafting the Resignation Letter: An important first step is writing a professional and compliant resignation letter. Our staff can help with the drafting of this crucial document, making sure it conveys the resignation’s reasons clearly and properly.

• Board Meeting Procedure: If a board meeting is called to discuss the resignation, we can offer assistance or professional representation. Our professionals can lead conversations, respond to inquiries, and assist in formulating the resolution to accept the auditor’s resignation.

• Completing Form ADT-3: This important form must be accurately filled out and 
• submitted to the ROC within the allotted time frame. Our staff is skilled in managing these formalities, guaranteeing a seamless submission complete with the necessary attachments and the departing auditor’s digital signature.

• Suggestions for Assigning the Casual Position: Finding a replacement for the resigned auditor post can be difficult. To ensure compliance with the Companies Act’s standards, we provide professional guidance on how to find qualified individuals, comprehend the hiring process, and direct the onboarding process.

Suppose you entrust Lawgical Adda with these important activities. In that case, your business may concentrate on its core company with the assurance that all compliance pertaining to auditor resignation is being handled efficiently and expertly.

We can provide the same assistance if you’re seeking compliance support. Lawgical Adda’s solution provides end-to-end management of corporate governance and secretarial compliances, encompassing every phase of the entity life cycle. Don’t hesitate to get in touch with us if you want more information on the compliance standards and to outsource them to us. 

Focus on what you do the best! Let Lawgical Adda handle the rest. Choose our services for easy winding-up, restructuring and surrendering documents. Contact us today!