Welcome to Compliance Calendar, your trusted partner for all your legal, tax, and compliance needs. We understand that businesses operate in a complex regulatory environment, and staying compliant is crucial to your success. Compliance Calendar are here to guide you through the process of Resignation of Auditor, particularly focusing on Changing Statutory Auditor and Casual Vacancy as part of the Resignation of Auditor/Auditor Firm, in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. Changing Statutory Auditor is a significant decision that requires careful consideration and adherence to legal requirements. Our expert team at Compliance Calendar is well-versed in the relevant regulations and can provide you with comprehensive assistance.
Here's What You Need to Know:
When an auditor wishes to resign from their position, they must follow the prescribed procedures outlined in the Companies Act, 2013. The process involves notifying the company's Board of Directors about the intention to resign and submitting a formal resignation letter. Compliance Calendar can help you with the support services whether you are an Auditor or a company helping you with the professional resignation letter that meets all legal requirements and ensures a smooth transition for filing ADT-3 with the MCA.
- Casual Vacancy of Statutory Auditor
In the event of a casual vacancy arising due to the resignation of an auditor, it is crucial to address the situation promptly and in compliance with the law. As per the Companies Act, 2013, the Board of Directors is responsible for filling the casual vacancy within thirty days from the date of the resignation and the appointment of new auditor shall be valid till the ensuing AGM.
- Appointment of New Auditor
When filling a casual vacancy, the new auditor must be appointed by the Board of Directors and confirmed by the company's shareholders at the next general meeting. Compliance Calendar can guide you through the process, ensuring that all necessary steps are taken, including the preparation of relevant resolutions, documentation, and compliance with statutory timelines.
- Compliance with Companies Act, 2013
We understand that complying with the Companies Act, 2013 and its rules can be challenging, considering the dynamic nature of the legal landscape. Compliance Calendar keeps you updated with the latest regulatory changes, ensuring that your business remains in full compliance. Our team of compliance experts will assist you in understanding and implementing the provisions relevant to the resignation of auditors, ensuring a seamless transition for the new auditor while adhering to all legal requirements.
Reasons to choose Compliance Calendar
We are committed to providing you with comprehensive and reliable support for all your legal, tax, and compliance needs. Our experienced professionals understand the nuances of the Companies Act, 2013, and its rules, enabling us to guide you through the complexities of the resignation of auditors.
Contact us today to avail our expert services and ensure a smooth and compliant transition in changing your statutory auditor or addressing casual vacancies. Trust Compliance Calendar for all your legal, tax, and compliance requirements, and experience peace of mind in your business operations
Documents Required for the Resignation of Auditor
Following is the broad list of documents required for the Resignation of Auditor:
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Sr. No
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DOCUMENTS
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1.
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Copy of Resignation Letter
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2.
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Copy of Board Resolution passed accepting the Resignation of Auditor & Appointment of Auditor in case of casual vacancy
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3.
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Copy of Notice of General Meeting along with Explanatory Statement
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4.
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Copy of Ordinary Resolution passed at the General Meeting of the Company for Appointment of Auditor in case of casual vacancy
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5.
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Copy of intimation by the company to the auditor
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Copy of written consent by the auditor, in regard with eligibility u/s 141 of the Companies Act 2013
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6.
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Basic Details of the Resigning Auditor & Auditor appointed in case of casual vacancy:-
a. PAN
b. Name of the Auditor
c. Membership No/ Firm Registration No
d. Address of the auditor
e. Email Id of the Auditor
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7.
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E-Form ADT 1 along with the receipt filed for appointment of Auditor
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Procedure for the Resignation of Auditor
For accepting resignation of Auditor & Appointment of Auditor in case of casual vacancy due to resignation:
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Sr. No
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PARTICULARS
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PROCEDURE
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1.
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Tendering Resignation Letter
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The auditor will tender his resignation by a letter in writing stating the facts and reasons of resignation to the Company.
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2.
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File E-Form ADT-3
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The Auditor who has resigned shall file a statement in E-Form ADT-3 within 30 days from the date of resignation with the Company as well as Registrar of Companies.
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3.
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Proposal to the Auditor to be appointed in case of Casual Vacancy caused due to resignation
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The Company representative to forward proposal to the proposed auditor.
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3.
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Eligibility of Auditor
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Obtain a written consent from the auditor, in regard with eligibility u/s 141 of the Companies Act 2013
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4.
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Notice of Audit Committee Meeting
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The audit committee shall recommend to the board, the name of an individual auditor or of an audit firm who may fill the casual vacancy in the office of Auditors, Wherein the audit committee is not applicable the board shall fill the casual vacancy in 30 days.
Draft and issue notice calling Audit Committee meeting in such manner as prescribed in Section 177 of the Companies Act 2013 and Secretarial Standard
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5.
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Conducting an Audit Committee Meeting
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Convene a meeting of the Audit Committee to make recommendations to the Board for appointment of Auditor in case of casual vacancy.
If the Board agrees with the recommendation of the audit committee, it shall fill the casual vacancy within 30 days.
Wherein the audit committee is not applicable the Board shall fill the casual vacancy in 30 days.
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6.
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Notice of Board Meeting
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Draft and issue Notice calling Board Meeting in such manner as prescribed in Section 173 of the Companies Act 2013 and Secretarial Standard 1.
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7.
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Conducting a Board Meeting
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Convene a Board Meeting in accordance with the provisions of Section 173 (3) for
· Taking Note of the Resignation of Auditor
· Consideration of the recommendation of the Audit Committee for appointment of Auditor
· Appointment of Auditor in case of casual vacancy due to resignation
· Convening extraordinary general meeting
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8.
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Notice of general meeting (where the casual vacancy caused by resignation)
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Draft and issue notice calling extraordinary general meeting along with the explanatory statement as required under Section 102 and in such manner as prescribed in Section 100 and Secretarial Standard 2 (within a period of 3 months of the recommendation of the Board) to obtain the approval of members.
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9.
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Conducting extraordinary general meeting (where the casual vacancy caused by resignation)
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Convene Extraordinary General Meeting (EGM) for passing of an Ordinary Resolution.
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10.
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Passing of resolution at the General Meeting.
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Pass a resolution at a duly convened general meeting for appointment of an individual/firm as auditor who shall hold office till the conclusion of the next annual general meeting.
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11
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Issue an appointment Letter
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Issue an appointment letter to the auditor after conclusion of the annual general meeting within 15 days
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12.
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File E-Form ADT-1
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File Form ADT-1 along with the necessary attachments with the ROC within 15 days from the date of the general meeting appointing as an auditor
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Features
- An auditor may resign at any time before the expiry of his tenure and there is nothing which can prevent him from doing so.
- The resignation must be in writing as it is required to be filed with the Registrar of Companies along with Form ADT-3.
- Any casual vacancy in the office of an auditor of a company (other than a company whose accounts are subject to audit by an auditor appointed by the CAG) must be filled by the Board of the Company within 30 days of the occurrence of it. But if the casual vacancy has arisen by resignation of auditor, it must be filled by the company at a general meeting (by an ordinary resolution) within three months of the recommendation of the Board. The resolution may be passed by postal ballot.
- The Auditor appointed shall hold the office till the conclusion of the ensuing Annual General Meeting.
- The Companies Act 2013 seeks to ensure that the appointment of auditor is not in the hands of the directors. So, the same is vested in the general body of shareholders.
- The directors may abuse the power to fill a casual vacancy by forcing a vacancy to come into existence, that is why it is enacted that casual vacancy caused by resignation shall be filled by the shareholders only.
- We, the team of experienced professionals at Compliance Calendar, can help to comply with the legal and procedural requirements with respect to resignation & casual vacancy of Auditor in timely manner.
Legal Side of Resignation of Auditor
Section 140 (2) & (3) and Section 139(8) of the Companies Act 2013 contains the provisions with respect to Resignation of Auditor and Casual Vacancy.
An auditor may resign before his term of office expires by lodging a resignation letter in writing to that effect at the company’s registered office. His resignation becomes effective on the date he lodges such notice, or such other later date as may be specified in the notice.
- Understanding the Legal Perspective
Section 140 (2) & (3) of the Companies Act 2013 specified additional requirement with respect to resignation by auditor whereby an auditor, who resigns (in case of a company other than Government Company) from his office, is required to file a statement in E-Form ADT-3 with the company as well as the Registrar of Companies containing the reasons for resignation within 30(thirty) days from the date of resignation. In case of Government Company, such statement has to be filed with the Comptroller and Auditor-General of India. The statement shall indicate the reasons and other facts as may be relevant regarding his resignation. If the auditor does not file the statement within 30 days of resignation, he will be penalized for the same.
- Casual vacancy arising due to resignation
The term “casual vacancy” is not defined under the Companies Act 2013. Simple meaning of “Casual” means happening by chance, unexpected, fortuitous, unforeseen, accidental and not by efflux of time. Casual vacancy is a vacancy when the office of an auditor becomes vacant before his term of office will expire in the normal course. It is a vacancy not occurring by efflux of time, that is, any vacancy occurring by death, resignation or bankruptcy. A casual vacancy may arise because of death, disqualification, resignation, incapacity, removal etc.
In case of companies other than Government companies, casual vacancies should be filled by the Board of Directors within 30 days of the occurrence of it. In case of a casual vacancy arising because of “resignation” of an auditor, the shareholders of the company need to appoint an auditor within three months from the date of recommendation of the Board of Directors and he shall hold office till the conclusion of the next Annual General Meeting.
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