Auditors are appointed by the members at the general meeting of the Company, similarly power to remove auditor before his/her/its term is also entrusted with the members. Further in case of resignation of auditor the casual vacancy arise will be also be filled ultimately through members of the Company at the members meeting. Section 139 of Companies Act, 2013 (“Act”) explains the situation of casual vacancy whereas Section 140 of the Act deals with removal, resignation of auditor and giving of special notice.

1. Resignation of
Statutory Auditor

2. ▸ Auditors are appointed by the members at the general meeting of the Company, similarly
power to remove auditor before his/her/its term is also entrusted with the members.
Further in case of resignation of auditor the casual vacancy arise will be also be filled
ultimately through members of the Company at the members meeting.
▸ Section 139 of Companies Act, 2013 (“Act”) explains the situation of casual vacancy
whereas Section 140 of the Act deals with removal, resignation of auditor and giving of
special notice.
INTRODUCTION

3. If vacancy arises due to resignation of auditor appointment:
1. Any director or person authorised by the Board will dispatch a notice to call for Board
Meeting.
2. Notice shall be given as per section 173 of the Act read with SS 1 on Board Meetings.
3. Conduct Board Meeting within 30 days of vacancy arises to appoint an auditor in place of
existing auditor.
4. Pass the board resolution after assent of the board members and call for a general
meeting for approval of members to approve the appointment of auditor and to authorise
someone to provide certified copy of resolution and other document as may be required
to give effect to this resolution.
5. Dispatch notices for calling an EGM/ AGM to all the members in accordance with
provisions section 101 of the Act read with SS 2 on General Meetings
6. Accord approval of Members through Special Resolution at EGM/ AGM.
7. After passing special resolution, file the intimation of change to the ROC within 15 days
from the date of passing special resolution in the E form ADT 1.
PROCESS –
CASUAL
VACANCY BY
RESIGNATION

4. The General Meeting to be called within three months of the recommendation of the Board
and auditor shall hold the office till the conclusion of the next annual general meeting.
The auditor who has resigned from the company shall file E Form ADT-3 within a period of
thirty days from the date of resignation.
POINTS TO
REMEMBER

5. If vacancy arises due to reason other than resignation of auditor appointment:
1. Any director or person authorised by the Board will dispatch a notice to call for Board
Meeting.
2. Notice shall be given as per section 173 of the Act read with SS 1 on Board Meetings.
3. Conduct Board Meeting within 30 days of vacancy arises to appoint an auditor in place of
existing auditor.
4. Pass the board resolution after assent of the board members and call for a general
meeting for approval of members to approve the appointment of auditor and to authorise
someone to provide certified copy of resolution and other document as may be required
to give effect to this resolution.
5. After passing board resolution, file the intimation of change to the ROC within 15 days
from the date of passing resolution in the E form ADT-1.
Points to remember:
The auditor appointed by the Board shall hold the office till the conclusion of the next annual
general meeting. The auditor who has resigned from the company shall file E Form ADT-3
within a period of thirty days from the date of resignation
PROCESS –
CASUAL
VACANCY – (BY
DEATH,
INCAPACITY
ETC.)

6. Whenever Company is of opinion that the conduct of the auditor is not satisfactory or he is not
coordinating of completion of audit or any for any reason where Company thinks fit to appoint
new auditor in place of existing auditor then such removal can be made after complying
provision of section 140 of the Act read with rule 7 of The Companies (Audit and Auditors)
Rules.
Such removal requires approval of Central Government, which is entrusted to the Regional
Director vide notification no. [F. No. 1/6/2014-CL.-V.
Before taking any action under this section, the auditor concerned shall be given a reasonable
opportunity of being heard.
REMOVAL OF
AUDITOR –
BEFORE EXPIRY
OF TERM

7. • Any director or person authorised by the Board will dispatch a notice to call for Board
Meeting.
• Notice shall be given as per section 173 of the Act read with SS 1 on Board Meetings.
• Conduct Board Meeting to remove the auditor and to propose name of new auditor.
• Pass the board resolution and within 30 days of passing board resolution, file E Form ADT-2
applying to the Central Government for removal of auditor.
• After receipt of approval from the Central Government call board meeting to take note of
approval from the Central Government and to convene general meeting for approval of
members within sixty days of receipt of approval.
• Dispatch notices for calling an EGM/ AGM to all the members in accordance with provisions
section 101 of the Act read with SS 2 on General Meetings
• Accord approval of Members through Special Resolution at EGM/ AGM.
• After passing special resolution, file the intimation of change to the ROCwithin 15 days
from the date of passing special resolution in the E form ADT-1.
PROCESS OF
REMOVAL

8. As per section 140(4) of the Act, Special notice shall be required for a resolution at an annual
general meeting:
• For appointing as auditor a person other than a retiring auditor,
• For providing expressly that a retiring auditor shall not be re-appointed
Except where the retiring auditor has completed a consecutive tenure of five years/ ten years.
Such special notice can be given by members of the Company, and on receipt of such notice
Company will forward the notice to the retiring auditor.
Any representation is made by Auditor will be circulated to the members.
If a copy of the representation is not sent as aforesaid because it was received too late or
because of the company’s default, the representation shall be read out at the meeting.
SPECIAL NOTICE
FOR APPOINTING
AUDITOR OTHER
THAN RETIRING
AUDITOR

9. If the Tribunal is satisfied on an application either of the company or of any other aggrieved
person that auditor has misconducted, then, the copy of the representation may not be sent
and the representation need not be read out at the meeting.
The Tribunal either suo moto or on an application made to it by the Central Government or by
any person concerned, if it is satisfied that the auditor acted in a fraudulent manner it may, by
order, direct the company to change its auditors.
An auditor against whom final order has been passed by the Tribunal shall not be eligible to be
appointed as an auditor of any company for a period of 5 years from the date of passing of the
order and the auditor shall also be liable for action under section 447 of the Act
Companies are required to adhere to the above said provision while resignation/removal of
auditor of the Company. Further these process will amend accordingly for listed companies
and companies registered under any other regulatory bodies like IRDA, RBI.
It is also pertinent to note that these provision are only for non-government companies , for
government companies any other company owned or controlled, directly or indirectly, by the
Central Government, or by any State Government or Governments, or partly by the Central
Government and partly by one or more State Governments, appointment of auditor is done by
Comptroller and Auditor-General of India after following another set of provisions.
ROLE OF
TRIBUNAL

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