Procedure to remove auditor is covered by the section 140 (1) read with Companies (Audit and Auditors ) Rules 2014,
Here is what section 140 says
- The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf in the prescribed manner
- Provided that before taking any action under this sub-section, the auditor concerned shall be given a reasonable opportunity of being heard.
The prescriber manner of taking approval from Central Government is defined in Companies (Audit and Auditors) Rules which says
- The application to the Central Government for removal of auditor shall be made in Form ADT-2 and shall be accompanied with fees as provided for this purpose under the Companies (Registration Offices and Fees) Rules, 2014.
- The application shall be made to the Central Government within thirty days of the resolution passed by the Board.
- The company shall hold the general meeting within sixty days of receipt of approval of the Central Government for passing the special resolution.
What Information Should be Submitted in ADT-2?
- Date of passing the special resolution
- Date of Filing MGT-14 for uploading special resolution
- Date of holding Extra Ordinary Meeting or Annual General Meeting seeking to remove the Auditor
- Details of the application clearly indicating the grounds for seeking removal of auditor
- Whether the accounts have been qualified during last three years
- Details of opportunity given to auditor concerned for being heard
- Whether any civil/criminal proceedings are pending between the company and the concerned officers?
- Date of appointment of the concerned Auditor
- Period for which the auditor was appointed
- Whether any special notice has been received for removal of Auditors
- Whether all due audit fee has been paid to the concerned Auditors
- Details of other services been rendered by such Auditors to the company
- Pendency of Audit i.e. number of financial years for which audit is pending
- Stage of accounts of the company for each of such financial year which is 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.
Process of Removal of Auditor can be summarised as below:
- Hold a Annual General Meeting or EGM seeking to remove Auditor
- Pass a Special Resolution
- File the mgt-14
- File the details as specified in ADT-2 within 30 days of passing the resolution along with prescribed fees
- Once the approval is received, hold general meeting within 60 days