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FAQs on appointment / rotation / removal of Auditor under Companies Act, 2013 (Other than Government Company)

November 9, 2016     by bsamrishindia.com

FAQs

First Auditors:

I have just incorporated a Company. When do I appoint the first Auditor of the Company and how?

  • First auditor shall be appointed by the Board within a period of 30 days from the date of registration of Company. E-form ADT-1 is required to be filed within 15 days from the date of appointment.
  • Following documents are to be attached alongwith ADT-1:
    1. Written consent from Auditor
    2. Certificate from the Auditor that he is not disqualified to be appointed
    3. Copy of the Board Resolution

What if the Board is not able to appoint the first Auditor within 30 days of incorporation?

  • If the Board fails to appoint, then it shall inform the members about the same. The members shall within a period of 90 days, at an extraordinary general meeting, appoint an auditor.

What would be tenure of first auditor?

  • First auditor, appointed as above, shall hold the office till the conclusion of first Annual General Meeting

Term of appointment of Auditor

The Auditors under the Companies Act, 1956 (Old Act) were appointed every year at the Annual General Meeting (AGM). They were appointed till the next conclusion of next AGM, and were reappointed, subject to their availability and certain conditions. What is the term of appointment of Auditor under Companies Act, 2013?

  • The Auditor shall hold the office from the conclusion of first Annual General Meeting till the conclusion of sixth Annual General Meeting subject to ratification of appointment by the members at every subsequent AGM.
  • Ratification of appointment of the Auditor is to be done by the members of the Company at every AGM.

What, if company fails to ratify?

  • If a company forgets to ratify the appointment of auditor in the subsequent AGM then there is no penal provision in the relevant section of the Act. The best part for this omission is that there is no requirement to file any e-form for ratification. But one should, nonetheless, take care of the same.

Whether e-form ADT-1 is required to be filed for ratification of the appointment of auditor?

  • There is no need to file ADT-1 at the time of ratification.
  • Note: As per Companies Amendment Bill, 2016, the concept of ratification has been withdrawn. If it is approved, there will be no need to ratify the appointment of auditor at every AGM by the members.

Is ADT-3 required to be filed after completion of the tenure of the auditor?

  • The purpose of Form ADT-3 is to intimate the ROC about the termination of the office of the auditor (whether by way of resignation or death of auditor) before the expiry of his/her tenure. ADT-3 is not required in following situations:
    1. If any new auditor (other than First Auditor) is appointed in the first AGM, no need to file ADT-3 as term of the First Auditor is only till the conclusion of first AGM. However, company shall file ADT-1 towards the appointment of new auditor appointed post the first AGM.
    2. Mr. A is appointed as auditor for 5 years. After completion of said 5 years, if Mr. B is appointed as auditor, no need to file ADT-3 for A. Company shall file ADT-1 for the appointment of B.

Casual Vacancy

The Statutory Auditors of our company have resigned. What is the procedure to appoint a new Auditor?

  • Casual vacancy to be filled by the Board within a period of 30 days.
  • If casual vacancy arises due to resignation of auditor then it shall be approved by the members within a period of 3 months from the date of appointment.
  • There is no need of members’ approval if casual vacancy arises due to reasons other than resignation. The reason may be death, etc but does not include removal.
  • The Auditor who has resigned, is required to file e-form ADT-3 within a period of 30 days from the date of resignation.
  • E-form ADT-1, towards appointment, is required to be filed within 15 days from the date of appointment, i.e. Board meeting held to fill casual vacancy. SRN of the e-form ADT-3 filed by the previous Auditor is to be mentioned in ADT-1 (appointment form of new Auditor). So, ADT-3 Shall be filed before ADT-1.

What would be tenure of auditor appointed in casual vacancy?

  • Auditor appointed in casual vacancy shall hold the office till the conclusion of next Annual General Meeting.

Whether the form filing is required at every type of appointment of auditor?

  • Yes, at every type of appointment i.e first auditor, casual vacancy or appointment at AGM,the Company shall file ADT-1 for such appointment.

Is Form ADT-3 is required to be filed in case of death of auditor?

  • As per Section 140 of the Companies Act, 2013, the Auditor who has resigned before the expiry of his tenure shall intimate to ROC in Form ADT-3. In case of casual vacancy arisen due to death of auditor, the Company should file Form ADT-3 with the death certificate of the auditor as the attachment. In case the death certificate has not been issued yet, the Company can file a declaration along with the obituary published in newspaper (if any) as the mandatory attachments to Form ADT-3. Subsequently, you can proceed with filing Form ADT-1 for the new auditor.

Rotation of Auditor

Is the concept of rotation of auditor applicable to every company?

No, the provisions pertaining to Rotation of Auditors are applicable to the following companies only:-

  • Every listed Company;
  • All unlisted public Companies having paid up share capital of rupees 10 crore or more;
  • Every private company having paid up share capital of rupees 20 crore of more;
  • All companies having public borrowings from bank, financial institutions or public deposit of rupees 50 crore or more.

What is the term for which an Auditor can be appointed in the company?

As per Section 139(2) of the Companies Act, 2013, the aforesaid categories of Companies have to mandatorily rotate their Auditors as follows:

  • An individual can be appointed as auditor for a term of five consecutive years;
  • An audit firm can be appointed as auditor for two terms of five consecutive years

After completion of aforesaid term auditor cannot be re-appointed as auditor of the same company for a period of five years.

Removal of Auditor

We have appointed the Auditor of the company for a term of 5 years. However, some differences have crept in and we want to remove the existing auditor?He is not resigning, nor giving audit report, what to do?

  • The only mechanism for removal of a Statutory Auditor appointed under the Act before expiry of the term, requires the prior approval of the Central Government (at present, the powers have been delegated to the jurisdictional Regional Director).
  • Special resolution of the company passed by the members is also required.
  • Auditor should be given suitable opportunity to make representation
  • MGT-14 to be filed w.r.t Special Resolution
  • File application in form ADT-2 alongwith the grounds of removal and other details, for Central Government approval.
  • INC-28 is to be filed within 30 days alongwith the copy of Central Govt. approval.

169 thoughts on “FAQs on appointment / rotation / removal of Auditor under Companies Act, 2013 (Other than Government Company)

  1. AB Pvt. Ltd appointed an auditor for five years under Sec.139 (1) for five years in Sept. 2019 AGM. Now the company wants to change the auditor and he will resign on the date of AGM in Sept. 2020. Can the Board recommend new auditor to be held in end of Aug. 2020 for appointment in Sept. 2020 AGM. Pl let me know the procedure to be followed including the date of resignation of the existing auditor.

    1. In case you want the new auditor to commence tenure from date of ensuing AGM, then the Board can pass a resolution proposing the appointment of the new auditor in the meeting in which the Board shall be approving the Notice of the AGM. Then, the business for appointment of auditor can be taken as ordinary business in upcoming AGM.
      However, note that the resignation letter from the auditor should be received before the board meeting; only then the board can take up the matter of appointment of auditor in the board meeting.

  2. Mr. A (CA) is appointed as first auditor of the private company within 30 days of incorporation and after few days Mr. A merge with Mr. B and enters into partnership firm. Now we have to appoint partnership firm as auditor instead of Mr. A.

    Should we file Adt-3 for casual vacancy and then again file Adt-1 for appointment of partnership firm ?

    1. There are no specific provisions under the Companies Act, 2013 on this particular matter. In case of rotation of auditors, the incoming auditor or audit firm shall not be eligible if such auditor or audit firm is associated with the outgoing auditor or audit firm under the same network of audit firms. Yes, an ADT-3 for resignation can be filed and ADT-1 can be filed with Board resolution and approval of members. Per Section 139(8) the tenure of the auditor filing the casual vacancy shall be till the conclusion of the next annual general meeting.

  3. Hello sir, our company has appoint a auditor firm in 2004 and it continue to act as auditor till now, in the coming agm it’s tenure will be end as it was reappointed in 2015. Our company is a private company and does not come under threshold limit of 139(2). Can we again re appoint the same auditor firm for further five year.
    I tried to fill ADT 1 and mention previous tenure of 15 years but it give me option of only 10 years.

    1. Since your company does not fall under the threshold limit prescribed under Section 139(2) of the Companies, 2013, your Company is eligible to appoint the same auditor firm for a further period of 5 years. Though you are facing an error while filing the Form ADT-1, you can try the following:

      • Make sure that you have entered the correct details in Form ADT-1
      • Download a new form and see if the error persists
      • If the error is persisting, you can raise a ticket with MCA
      • Also, check if the Company is still not covered under the threshold limit

  4. Appointment of Stat Auditor-
    In a listed company, if a firm is appointed as stat auditor for a period of 5 years & dont wish to appoint it for further 5 years, is there any requirement of special notice ?

    1. No, if the term of the auditor is expired special notice is not required to be given.

      However, in case the Company is desirous of removing the auditor prior to completion of the first tenure, then, the conditions under Section 140 (including CG Approval and special notice) to be complied.

  5. A Pvt Ltd Company appointed an auditor for 5 years. However right after signing the Financial Statements for the 2nd year , the auditor resigned 10 days before AGM. Shall it amount to casual Vacancy? can the company appoint new auditor for a period of 5 years in the AGM?

    1. A casual vacancy in the office of auditor arisen as a result of resignation of previous auditor (any number of days prior to completion of his office tenure) is to be filed by the Board within 30 days i.e a Board Resolution to be passed to recommend to shareholders the appointment of new auditor. Thereafter a general meeting to be held within 3 months of recommendation of board to approve such appointment. Hence in your case, a Board Meeting can be conducted before the ensuing AGM and the agenda to appoint new auditor can be taken up at the ensuing AGM.

  6. Sir, i have filed form RD1 along with ADT-2 and fees to RD on 04/06/2020 for removal of Auditor of a very small pvt. ltd. co. After more than a month status of SRN shows ” Pending for ROC report” . What it means and what happen next to get the approval . Is there any hearing at RD office we have to face? Pls, advise.

    1. From your query, we could not understand which form (ADT-2 or RD-1) is having such status as ‘Pending for ROC report’. However, in our experience, for almost all e-forms requiring an RD Approval, an original hard copy of all the related documents is submitted with the RD office and thereafter a hearing is held with RD to proceed with approval of form if application is in order.

  7. ABC Pvt Ltd has a public deposits are more than 50cr, it has appointed an individual auditor and the concept of rotation of auditor is applicable.
    Now for FY 19-20 the term of 5yrs is completed but the public deposits are less than 50cr..
    Is ABC pvt ltd should appoint another auditor for FY 20-21 or can continue the existing auditor as the rotations conditions are not satisfied?

    Kindly please answer this… thank you in advance

    1. Dear Sir,

      Pursuant to Section 139(2)(i) of the Companies Act, 2013, after completion of term of 5 consecutive years an individual auditor cannot be re-appointed as auditor of the same company for a period of 5 years.

      In the given case, since the auditor liable to rotation has completed his term of 5 years in FY 2019-20, he can be re-appointed in the same company only after FY 2024-25.

      Thus, another auditor is to be appointed by the company, however, his office would be liable for rotation only when such company falls under the category of specified class of companies (http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=18069).

  8. Dear Sir
    Hope you are doing well.

    Please share your view in case where a private company is under the process of strike off, Do it still require to comply with the various provisions of Companies Act, 2013 viz. auditor appointment etc.

    Thanks in appreciation.

    1. As per the provisions of Section 248 of the Companies Act, 2013 and Rules made thereunder, the company shall stand dissolved on the date of publication of form STK-7 in the Official Gazette by the registrar. Therefore, until and unless the Company is dissolved all the provisions of the Companies Act, 2013 shall remain applicable to the Company.

  9. Respected sir,
    I have ABC Pvt Ltd, my auditor filed Adt-1 in 2018 till 1st AGM of 2019. subsequently he didn’t made any financial statement for 1st AGM. Now company is in default of filing and want to take a benefit of company fresh start scheme and want to file previous years filing. How I make financial statement for 2019 AGM as my auditor not taking such steps.

    1. As we understand, the first auditor of the Company, who held office till 1st AGM, did not provide the audited financial statements for FY ended 31st March, 2019. However, the audited financials are mandatorily required to be placed in the AGM of the Company and the same is to be approved by the shareholders before filing it with the RoC. If the financials were not placed in the AGM, it is a contravention of section 129(2) of the Companies Act, 2013, and you are required to go for compounding of this offence as per section 129(7). Further, non-filing of financials is a contravention of section 137 of the Act. While delayed filing (here, under section 137) is covered under Companies Fresh Start Scheme (CFSS), the violation of law under section 129(2) is beyond its scope.

      For detailed understanding, you are requested to seek professional guidance in this matter.

    2. Respected Sir, in case of casual vacancy after appointment us 139(8) why one more ADT-1 is not required to be filed after EGM or AGM, as ultimately the appointment power of auditors rests with the Members. Or single ADT-1 could be filed after Members appointment at EGM or AGM.

      1. Dear Sir,

        The casual vacancy in the office of the auditor is required to be filed by the Board of Directors of the Company within 30 days. However, if the same has arisen due to the resignation of the previous auditor, the appointment of the new auditor shall be subject to the approval of members of the Company.

        The requirement to file Form ADT-1 shall arise from:
        • In case of resignation: within 15 days from the date of approval of the appointment by the members in the general meeting;
        • Other than resignation: within 15 days from the date of appointment by the Board

        Therefore, Form ADT-1 is filed only once after the appointment of the new auditor as per the above timeline.

  10. The auditor is appointed in the 1st AGM, and the provisions of sec 139(2) where applicable to the company, the auditors term for 5 consecutive years are done, can that same auditor be re-appointed in 6th AGM , if provisions of sec 139(2) are not applicable to the company?

  11. In our case, there are three companies not falling under Sec 139(2) and where the auditor is appointed till the ensuing AGM. Here, the company does not want to re-appoint the auditors in the ensuing AGM and wants to appoint a new auditor.

    1. How do we consider a term for the auditor? On the basis of F.Y. or AGM to AGM as one term?
    2. Can we appoint a new auditor without the requirement of special notice under Sec 140(4)?
    3. If the term will expire in the ensuing AGM then what is the process to appoint a new auditor?
    4. Can the new auditor be directly appointed for a period of 5 years in the AGM after Board’s approval?

    1. 1. As per Section 139(1), the auditor shall hold office from the conclusion of the first Annual General Meeting till the conclusion of every sixth Annual General Meeting. Hence, one term shall be considered from AGM to AGM.

      2. Yes, but only if the auditor has completed his tenure of five years or ten years, as the case maybe. Otherwise, if your company is replacing or appointing a new auditor in place of a retiring auditor, then your company shall mandatorily comply with section 140(4) Special Notice. However, if the auditor resigns before the expiry of his term, there will be no requirement of Special Notice.

      3. Kindly refer section 139 of Companies Act, 2013 read with rule 3 of Companies (Audit & Auditors) Rules, 2014, for the process of appointment.

      4. As per Section 139(1) read with Rule 3(7) of Companies (Audit & Auditors) Rules, 2014, every auditor shall be appointed for five years after the recommendation by Board/Audit Committee, if any, and approved by shareholders in Annual General Meeting.

  12. Sir I have appointed a Auditor Firm in Causal Vacancy in May 2019 upto the Coming AGM and in that same AGM I have appointed a same auditor for 5 Years. Now in the year 2020 that Auditor Firm demerged into Proprietor. Now my question is that:
    1. Whether we can appoint that same auditor.?
    2. When to appoint that Same auditor and how to appoint…?
    One more question is that if a tenure of auditor for appointment as an Auditor of 5 years is completed. Can he still be reappointed after 5 years or he can never be appointed in the same company. Thanks in Advance.

    1. Your company originally appointed an Audit firm as its auditor for 5 years, which subsequently demerged into a sole proprietorship. A proprietor is considered as an individual and Rule 6(3) of Companies (Audit and Auditor) Rules, 2014, is applicable only in case of expiry of the term of the auditors.

      Since this is a case of casual vacancy, your company could appoint the same auditor for a single term of 5 years. It being a casual vacancy, the Board can appoint the auditor within 30 days and no need of shareholders’ approval. Further, where an auditor completes his single tenure of 5 years or an audit firm complete its two terms of 5 years, both can be appointed in the same company only after a cooling period/ gap of further 5 years.

  13. Previous Statutory auditor has resigned in September, 2014 and I have appointed ABC & Co. (Firm) as a Statutory Auditor for the F.Y 2014-15 by the Board of Director (No casual Vacancy arised in that year and Company incorporated in the year 2006 ). After that the Same Auditor ( ABC & Co) has been reappointed for 5 years in the Annual General Meeting on 30th Sept 2015 (from 2015-2020). Now I have following queries:
    1. whether the same auditor firm can be reappointed?? if so appointed what would be the term of auditor ( whether 4 or 5 years) . if not eligible for appointed , then why?
    2. 1st year of Auditor appointment can be counted as one term or not?
    please clarify

    1. The concept for rotation of auditors was introduced under the Companies Act, 2013 for specific companies as mentioned in the Act. As per the provision of Section 139(2) of the Act, those companies cannot appoint or re-appoint:

      (a) an individual as an auditor for more than one term of five consecutive years; and
      (b) an audit firm as auditor for more than two terms of five consecutive years:

      The Companies were allowed a time period of 3 years from the date of commencement of Act i.e. 1st April, 2014 to comply with the said provision.

      However, the period of auditor for which the individual or the firm has held office as auditor prior to the commencement of the Act shall be taken into account for calculating the period of five consecutive years or ten consecutive years, as the case may be.

      Therefore, the re-appointment of auditor in AGM held on 30th September, 2015 for 5 years shall be counted as one term and the appointment of auditor for one term of FY 2014-15 may not be considered as one term if the appointment was due to casual vacancy. Hence, ABC & Co. may be re-appointed for one more term of 5 years.

      However, if the appointment of the auditor for one financial year 2014-15 was not due to casual vacancy, such period shall be considered for calculating period of 5 years and thus ABC& Co. may be re-appointed for a period of 4 years.

  14. Hiiiii,

    Can a Company has more than one auditor for same period ????

    Can auditor audit the financial statement of the financial year in which he was not auditor of that company ?

    1. As per section 139(3)(b) and rule 6(4) of the Companies (Audit and Auditors) Rules, 2014, it can be construed that the Company can appoint two or more individuals or firms as joint auditor to whom provisions of Rotation of Auditors are applicable.

      Further Section 143(2) of the Companies Act, 2014 stipulates that “the auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are required by or under this Act to be laid before the company in general meeting…”

      The auditor here means the Auditor Appointed under section 139(1) of the Companies Act, 2013. Therefore the auditor cannot audit the financial statement for the F.Y. in which he was not the auditor of that Company.

  15. ABC Pvt Ltd incorporated in Sep 2010 and appointed XYZ & Co., as their auditors. Till date (31st March 2020) they continue to be the auditors. The Company’s borrowings from Banks/ FIs exceeded Rs. 50 Crores as at March 31, 2019. Now when is the auditor liable to retire by rotation (assuming that the paid up capital has not exceeded the limits prescribed)?
    Please clarify

    1. Pursuant to the provision of section 139(2) of the Companies Act, 2013 read with Rule 5 of the Companies (Audit and Auditors) Rule, 2014, no listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint:

      (a) an individual as auditor for more than one term of five consecutive years; and
      (b) an audit firm as auditor for more than two terms of five consecutive years.

      In the present case, the said provision gets attracted w.e.f. 31st March, 2019. Therefore, the term of the existing Statutory Auditor, for the purpose of rotation, shall be counted from FY 2018-19. Per this, it has completed two consecutive years as auditor and 3 years are still to be completed to constitute one term.

  16. Could it would be possible to appoint same auditor which is appointed by board within 30 days of incorporation in first agm for the tenure of 5 year.

    1. Yes, there is no such prohibition in the Companies Act, 2013 to appoint the same auditor if the appointment of such auditor is approved by the shareholders in the annual general meeting of the company.

  17. sir, I have appointed ABC & Co. as a Statutory Auditor for the F.Y 2014-15 by the Board of Director due to causual Vacancy. Afterthat the Same Auditor ( ABC & Co) has been reappointed for 5 years in the Annual General Meeting on 30th Sept 2015. Now I have following queries:
    1. whether the same auditor firm can be reappointed?? if so appointed what would be the term of auditor ( whether 4 or 5 years) . if not eligible for appointed , then why?
    2. from last five years ( including casual vacany, the same parter has been signing the balance sheet. now whether same auditor of the ABC & co can sign the further balance sheet of upcoming 5 years or not?

    1. The tenure of the auditor appointed in case of casual vacancy is upto the date of ensuing annual general meeting of the Company as he is appointed in the place of resigning auditor to fill the vacancy. Therefore, he can be appointed for 2 consecutive terms. Further, as per the 139 (2), one term is of 5 consecutive Years. So, the term of appointment would be 5 Years.

      The same partner can further sign the balance sheet for next 5 years as there is no provision in the law about signing of balance sheet by auditors.

    1. To answer this query we would need to look into what the previous designation was, terms of appointment/ re appointment, provisions of the Articles of Association and provisions of the Companies Act, 2013 based on the designation.

    1. “Assuming your company doesn’t fall under Section 139(2) of the Companies Act, 2013 read with Rule 5 of the Companies (Audit and Auditors) Rules, 2014.

      A statutory auditor cannot be appointed for a term of less than five years, if so then the term of his/her appointment will be counted as one term. Therefore in your case the term will be counted as 3 separate term. “

  18. Sir. We are a firm of chartered accountants handling audit of a 3 year old company. We were appointed for a tenure of 5 years, but now the company has been taken over by another group & their registered office has been shifted to a different state. So now they wish to change the auditor & have already appointed a new auditor after obtaining our consent. But we never submitted any resignation & only gave our consent for appointing new auditors. In this case, does the company have to file ADT-2 or should we file ADT-3, or both? Thanks in advance.

    1. ADT-2 and ADT-3 are two different forms that are filed in two different scenarios.

      Form ADT-2 is filed by the Company with the Central Government in order to remove the auditor before the expiry of his/her term whereas Form ADT-3 is filed by the auditor itself in case of resignation.

      Since, you had provided your consent/No-objection certificate for appointment of new auditor, the Company might have assumed that you were willing to vacate the office and had treated your consent as deemed resignation. In the event of resignation of auditor, submission of Form ADT-3 is the duty of the resigning auditor.

  19. What happens if a private limited company crosses the threshold limit of 50 crores of paid up capital in between the year. will the clause rotation. Of auditors applicable. The year end borrowing is less than 50cr

    1. With respect to the provisions of Rotations of Auditors, the Act does not provides further explanation whether the threshold limit is applicable based on preceding audited Financial Statement. Hence, we would like to approach the issue conservatively i.e., the provisions of Rotation of Auditors will be applicable once the threshold limit of Paid-up capital triggers Rs. 50/- crores.

  20. In case of company, auditor office is vacated after 3 years then after 2 year.
    In 6 year then auditor can be re-appointed again

    1. We need a clarity on whether the auditor so appointed was an individual or an audit firm.

      Here, we are assuming that the auditor was an audit firm, please note that under Section 139(2) of the Companies Act, 2013, an audit firm shall be eligible for appointment for maximum two terms of 5 consecutive years and shall not be eligible for re-appointment until 5 years have lapsed from the date of completion of his second term.

      In the given case, every appointment shall be counted as separate term of appointment even if less than 5 consecutive years. Thus, the company cannot appoint the same auditor in the 6th year because the two terms for the auditor have already expired and the auditor can be appointed again, only after a break of minimum 5 years after expiry of such two terms.

  21. Sir,
    We filed ADT-1 after the board of directors meeting instead off EGM appoint auditor to fill up casual vacancy due to resignation of auditor. After EGM we filed again Form ADT-1 and SRN got approved. Please advise whether we need to cancel Form ADT-1 which we filed after board of directors meeting?. If yes, kindly advise how to cancel step by step.

    1. As per the provision of Section 139(8) of the Companies Act, casual vacany arised due to resignation of previous auditor shall be filled up by the Board of Directors of the Company subject to approval of members of the Company in a general meeting held within a period of 3 months from the date of recommendation by the Board.

      As per our understanding, the date of appointment should be the date on which the resolution has been approved by the Shareholders of the Company and the Form ADT-1 should be filed after the approval of the Shareholders.

      Hence, in the given case the ADT-1 filed after the Board meeting has no relevance, as in casual vacancy the appointment of Auditor is not valid until approved by the Shareholder. Since, ADT-1 filed after shareholders’ meeting is approved. The Company can take up this matter with ROC for cancellation of SRN of Form ADT-3 filed after Board’s approval.

  22. Can a statutory auditor surrender his COP without intimating the Company
    If Yes , then can we file ADT – 3
    with an inactive Membership number

    1. Please note that in this case the statutory auditor is advisable to firstly resign from the post of statutory auditor of the Company by intimating the reason (surrender of COP in your case) of the same to the Company and then should proceed with surrender of COP.
      Also, ADT-3 cannot be filed with an inactive membership number.

    1. In case if Company wants to remove the auditor (other than resignation) before completion of his tenure, Company has to comply with the provision of Section 140(1) of the Companies Act, 2013. The Company shall be required to take the approval of Central Government and pass a Special Resolution to remove the auditor.

  23. A company having a paid up capital of Rs. 15 Crores has filed adt-1 for the year 2015-16, after that no adt-1 had been filed , till 2014-15, some other auditor was there, now shall I appoint and file adt-1 again for five years including year 2015-16 or what?

    1. In pursuance to the provisions of Section 139 of the Companies Act, 2013, the Auditor shall be appointed for a term of five consecutive years.

      Kindly check if the appointment was made as per aforementioned provisions for 5 Years; in that case ADT-1 need not to be filed again till the expiration of five years.

  24. A running company has been struck-off by ROC vide a mass strike-off notification in Aug.2018. Can a statutory auditor refuse to audit the books of accounts? Please enlighten me.

    1. With the appointment of Interim Resolution Professional/Resolution Professional (IRP/RP), the powers of Board of Directors vested under the Companies Act, 2013 are suspended and the IRP/RP is mandated to manage the affairs of the Company. Nevertheless, the Auditor appointed by the members of the Company should continue to perform duties required as per the Companies Act, 2013.
      Since, the IBC Code, 2016 has an overriding effect over all other laws which are in force for the time being and Section 28 of the IBC Code, 2016 clearly states that the IRP/RP cannot make any changes in the appointment or terms of conduct of Statutory Auditors or internal auditors of the Corporate Debtor without prior approval of committee of creditor with 66% of the voting right.
      So, as per above, it is not mandatory to change the Auditor of the Company, if the IRP/RP wants to do so then prior approval of the Committee of Creditors will be required.

  25. Dear Sir/Ma’am,
    Our company is a private company and not covered under section 139(2).
    The tenure of 5 years of the auditor (individual) will expire at the ensuing genral meeting. Now Board wants to change the auditor and to appoint some one else. Can the same be done by board without receiving special notice under section 140(4) ?

    1. In the given case, since your Company is not covered in the class of companies prescribed under Section 139(2), the Board can at its discretion continue/ discontinue with the previous statutory auditor of the company who HAS served his full one term of 5 consecutive years. The requirement of serving a notice in accordance with Section 140 shall not be required as the auditor has already completed his tenure i.e. the said notice is required only if the Board desires to remove the auditors before expiry of his/ her tenure. Thus, the board after intimating to the existing auditor about the expiration of their term of appointment, recommend other auditor (after taking his consent for appointment) to be appointed at the ensuing AGM, the shareholders can take note of the expiry of the tenure of the previous auditor and pass an Ordinary Resolution to appoint a new statutory auditor.

  26. If our statutory auditor resigned on 8/9/2019 and then adt-3 also filed. board meeting is convened to appoint new auditor. and we have to file adt-1 within 15 days. now my ques is to take approval from shareholders can we take approval in AGM (which is to be conducted in this month only) instead of holding EGM.

    1. As per the provisions of Section 139(8) of the Companies Act, 2013 casual vacancy arising due to the resignation of auditor shall be filled by the Board of Directors of the Company within 30 days subject to the approval of the members of the Company in a general meeting convened within 3 months from the date of meeting of Board of Directors.

      In your case, the Company is firstly required to hold a Board Meeting for recommending the appointment of auditor. Thereafter, Company can get the approval of members of the Company in annual general meeting itself provided the meeting is held within 30 days from the recommendation of auditor.

  27. An auditor whose term is expired in this year 2019. The auditor did not want to re-appoint and the said company i.e. Board did not find the new auditor. On 30th Sept they hold AGM. My question is what is to be written regarding auditor in Directors report. and whether at AGM they can appoint new auditor without Board.

  28. If the tenure of 10 years of a Statutory Auditor has expired, how should the new auditor be appointed in the AGM? Which Forms are to be filed?

    1. Following procedure is to be followed for appointment of an auditor in AGM:

      • Firstly intimate the previous auditor that his tenure is going to expire at ensuing AGM of the Company as he has completed two terms of 5 consecutive years and hence not eligible for re-appointment as an auditor of the Company.
      • Then Company to approach the new auditor and intimate him about its intention to appoint him as an auditor of the Company (before the date of Board Meeting in which notice of AGM is to be approved)
      • Written consent from the auditor along with the certificate that the appointment, if made shall be in accordance with the provisions of the Companies Act and he fulfills the eligibility criteria as provided in section 141 shall be obtained from the Auditor (it shall be received before the date of Board Meeting in which notice of AGM is to be approved)
      • Company shall issue notice of AGM to the members proposing appointment of auditor in the agenda (along with other items).
      • Members may pass an ordinary resolution in AGM approving the appointment of such auditor.
      • Company shall issue appointment letter to the auditor within 15 days of the AGM
      • Filing of Form ADT-1 with the Registrar within 15 days from the date of AGM

  29. An auditor resigned as Statutory Auditor of a Company.
    He wants to get reappointed in the same company.
    Is there any restrictions on his reappointment ?
    What is the procedure?

    1. There are no restrictions on the re-appointment of such auditor if such re-appointment is as per the provisions specified under the Act and such auditor can be re-appointed following the procedure prescribed u/s 139.

      However re-appointment in the same Company is not allowed for five years from the completion of one term of five consecutive years, in case of an individual auditor and two terms of five consecutive years, in case of an audit firm.

  30. Company A ( falling under the preview of Section 139(2) under prescribed class of company) appoint / re-appoint same Audit firm as stat auditor in AGM of 2013-14, 2014-15,2015-16, 2016-17, 2017-18 & 2018-19 for term of 1 year & file ADT-1 every year in this respect. Whether we calculate maximum tenure of Auditor firm for 10 years in totality OR consider the appointment of firm as one term each and appoint another firm as auditor for subsequent years?

    1. As per the provisions of section 139 read with relevant rules, the tenure of Auditor firm shall be counted in totality irrespective of the fact that the Company appoints the Auditor firm every year and thereby files ADT-1 for such appointment each year.

      It may be noted that ‘term’ implies the term of five years for appointment by shareholders. As reflected by section 139(2) of the Act the duration of appointment must be one or two terms of five years as the case may be. The mandate given to shareholders is to appoint auditor for one or two terms of five years.

      An auditor firm can hold office for 2 terms of five consecutive years. Hence, the same auditor firm can be appointed for another 4 years to complete the tenure as per law.

  31. Statutory Auditors appointed for the year 2014-15 for one year and subsequently appointed for rive years .e. 2015-16 to 2019-20 then whether appointment of Firm as Statutory Auditors will be considered for two terms of five year or we can appoint him for further period of four years?

    1. As per Rule 3 of the Companies (Audit and Auditors) Rules, 2014 the Auditor appointed in the annual general meeting shall hold office from the conclusion of that meeting till the conclusion of the sixth Annual General Meeting which implies that an auditor shall be appointed for a term of five years and not less than that.

      We are assuming that your company falls under such class or classes of Companies as prescribed under Rule 5 of the Companies (Audit and Auditors) Rules, 2014. The Company had appointed an Auditor in the year 2014-15 for one year and subsequently for the next five year. Hence, in accordance with the act it shall be considered as two term.

      Moreover, if the said auditor was appointed by the Board of Director to fill the casual vacancy then the said auditor can serve the office for further four years.

  32. XYZ appointed its statutory auditor in its 14th AGM held on June 2015 till the conclusion of 18th AGM and mentioned 1st January 2015 to 31st December 2019 as period of Accounts to be audited in E-Form ADT-1.
    Later on, company changes its financial year from Calendar Year to Financial year as per Companies Act, 2013 and the financial year in which such change was executed was for 15 months i.e. 01st January 2015 to 31st March 2016.

    And now at the time of convening 18th AGM, do we need to consider appointment of Auditor for a period of next 5 years commencing form conclusion of 18th AGM to 23rd AGM ?

    Please advice

    1. As per the facts of the case, Auditors were appointed in the 14th AGM held in June 2015 till the conclusion of the 18th AGM. (For Financial Year 01st January 2015 to Financial Year 31st December 2018)

      Please note that 18th AGM of the Company will be held in the year 2019.

      In form ADT-1, appointment period for auditing is mentioned for FY 01st January 2015 – 31st December 2019. It seems data has been entered incorrectly in the Form.

      With regard to appointment for further 5 years, The Auditor were appointed for period from 01st January 2015 to 31st March 2019 (After changing Financial Year in 2016) or from the conclusion of the AGM in 2015 to the conclusion of the AGM in 2019 i.e. 4 Years.

      An auditor firm can be appointed for 2 terms of 5 years so it can be appointed for another term.

  33. Can CAG remove the branch auditor appointed by them without any reason? Can a consolidated auditor of a govt company be the branch auditor by removing the existing branch auditor?

    1. Yes, CAG can remove the branch auditor appointed by them after obtaining prior approval of the Central Government and by giving a reasonable opportunity of being heard to the concerned auditor in terms of provisions of section 140.

      Company’s auditor can also be a branch auditor as per section 143. However, a special resolution is required post approval of Central Government to remove an auditor.

  34. A company auditor of private company (rotation doesn’t applies) wants to discontinue as auditor after 3 years

  35. In case of Private company if Paid up capital of the company is less than cr.. and Auditor was appointed for two consequent terms of 5 years so in that case whether we can reappoint the Auditor this area ?

    1. The Rotation of Auditors in case of Private Limited Company is applicable to :

      a. having paid up share capital of rupees fifty crore or more; or
      b. having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more.

      In your case, if your company does not fall in the above category, then Auditor can be reappointed.

      1. If an individual auditor serves 5 years and re-appointed for 5 more years. What if after re-appointed, if in the very next year it came under the purview of 139(2). Then what to do?

        1. If the Company fall under the purview of Section 139 (2), then Auditor shall resign from the office and shall not do the audit for the remaining period. The Auditor gives the certificate to the company at the time of re-appointment that the proposed appointment is as per the term provided under the Act.
          Based on this, the Auditor shall provide a letter to the company that his reappointment now in not as per the term provided in the act due to applicability of Section 139 (2) of the Act.

  36. If a company falls under Section 139(2) and has appointed Firm X as the Statutory Auditor of the Company for two years. Thereafter, firm X resigned before the expiry of its term and Firm Y get appointed for the period of one year by the Board, the same was approved with the SH with in three months in AGM. Furhter, Firm Y resigned before the accounts approval and the Company re-appointed Firm X for one year. My query is can the same Firm X be appointed for the next year..if yes then what would be the tenure of appointment.

    1. As per provisions with regard to Rotation of Auditors, the Firm is eligible for appointment of 2 Terms of 5 consecutive years i.e. 10 Years.

      A break in the term for a continuous period of five years is considered as fulfilling the requirement of rotation but the break is to be for Five Years or More. (Explanation II and Notes to Illustration explaining rotation in Rule 6 of Audit Rules)

      In this Case, Firm X has been appointed for a Term of 2 Years before a break of 1 Year and then Firm X has been reappointed for 1 Year.
      The period for which it can be the Auditor is 2 Years and then a term of 5 Consecutive Years.

  37. Mr. A Chartered Accountant (Sole proprietorship firm) was incorporated in may 2013. B & C Chartered Accountants (Partnership firm) was incorporated in July,2017. Mr. A got merged with B & C in May 2018. further Company incorporation date is 16th Feb, 2016 so financial year will be 16th feb to 31st march,2017. The board meeting date for approving financial is 5th december, 2017 and agm date is 28th december, 2017.further Company has filed income tax for year return and balance sheet are signed by B & C (Partnership firm) Now my question is how can i show appointment of B & C in Company as their first auditor as the same was incorporated in July,2017 please resolve the same.

  38. If an auditor is appointed to fill casual vacancy and his tenure is till the next AGM. In next AGM, another auditor is appointed for 5 consecutive years. Whether ADT-3 is required to be filed?

    1. No. ADT-3 shall be filed only in case of resignation of auditor. If the tenure of the previous auditor is completed (as in your case previous auditor’s term was only till the conclusion of AGM), you can appoint the new auditor and file ADT-1 for the appointment of new auditor.

      1. In case the auditor appointed in casual vacnacy is to be reappointed as auditor in the next AGM, whether he can be appointed for next 5 years where the company is liable to rotate auditors every 5 years, or should he be reappointed for 4 years only, as he has already done audit of previous 1 year when appointed in casual vacancy? Thanks.

        1. Appointment of Auditor is an ordinary business taken up at the Annual General Meeting of the Company. Section 139 provides that the auditor shall be appointed/re-appointed for a term of five years. The Act is silent on the manner in which the calculation for 5 years will be done where the auditor has also been appointed through casual vacancy.

          In view of the above, we are of the interpretation that the auditor shall be re-appointed for a fresh term of 5 years and the period of 1 year as casual vacancy shall not be counted.

  39. In case death of auditor what is the procedure for filing of ROC. ADT-3 is required or not. In case if it is not required then what i can fill in ADT-1 form about SRN of ADT-3

    1. As per Section 140 of the Companies Act, 2013, the Auditor who has resigned before the expiry of his tenure shall intimate to ROC in Form ADT-3. In case of casual vacancy arisen due to death of auditor, the Company should file Form ADT-3 with the death certificate of the auditor as the attachment. In case the death certificate has not been issued yet, the Company can file a declaration along with the obituary published in newspaper (if any) as the mandatory attachments to Form ADT-3. Subsequently, you can proceed with filing Form ADT-1 for the new auditor.

        1. Form ADT-3 is required to be filed only when the auditor resigns from the Company {Sec 140(2)}. In case of death of auditor, it results in casual vacancy which is to be filled by the Board of the concerned company.

          Further, if the auditor had resigned but died before filing of the form ADT-3, as per our understanding, it would be better if the Company treats it as casual vacancy due to death and appoints a new auditor. Alternatively, the concerned RoC can be informed by physical submission of requisite documents i.e. death certifcate, resignation letter etc.

    1. Eligibility Letter is provided by an auditor for the term of his appointment. Therefore, it is not required every year. However, if the auditor falls under any disqualification after appointment, he/she is required to vacate his office as such auditor.

  40. Can i appoint auditor in EGM whjch will be conducted after AGm of 30/09/2018, probably by 27/12/2018, and also the same resolution of five years will be passed?

    1. Appointment of auditor is an ordinary business which has to be conducted in the AGM. However, casual vacancy can be filled in the EGM to hold the office till the conclusion of next AGM. If it is a case of other than casual vacancy that you want to fill in the EGM, we would suggest you to kindly obtain facts-based expert opinion, before such appointment.

  41. Dear Sir, Can auditor be appointed in EGM , which will be held after AGM of 30/09/2018, and if so, the auditor will be of same period of 5 yrs of,conclusion of first agm to Sixth agm?

    1. Filing of ADT-1 is the responsibility of the company and filing of ADT-3 is the responsibility of the auditor. Therefore, auditor can file ADT-3 inspite of the fact that ADT-1 is not filed by the company, thereby having no non-compliance on his part.

  42. Whether a singe ADT would suffice when the previous auditor resigned, and while filling the casual vacancy, the same auditor be appointed for five ensuing years. Bottom line: one auditor appointed to fill casual vacancy, and reappointing for next five years, will one ADT-1 suffice or 2 ADT-1 are required

    1. All the requirements of Sec 139(8) shall be complied i.e. he shall hold office till the conclusion of the next Annual General Meeting of the Company, Company being other than Govt. Company. The Company can reappoint the Auditor for a fresh tenure of 5 years only post completion of his casual- vacancy tenure. Hence, the Company shall file 2 separate ADT-1 for appointment to fill in casual vacancy and reappointment for fresh tenure of 5 years.

  43. My company appointed CA for 1 year, right after the incorporation. His term was till 31st March 2018, which has now expired. CA is not professional enough and we don’t want to hire him again. We already have decided upon hiring a new CA,but the old CA is not issuing a NOC certificate. What can we do?

    1. As per ICAI Code of Ethics the proposed appointee Statutory Auditor shall obtain an NOC from the retiring auditor in case the proposed new appointment is to be made before the expiry of tenure of the retiring Auditor i.e. in case of Casual Vacancy.
      Our suggestions would be that if the term of the old auditor has expired, you can go ahead with the appointment of the new auditor. The new auditor can serve a notice to the old auditor intimating him about his appointment. In case the old Auditor has any issues, he shall revert back in writing.

  44. Dear Sir,
    If a company fails to file the ADT-1 for the period FY2016-17, and now they want to file the ADT-1, then what is the penalty/fine/Late fee?

  45. Good morning ,

    I am a CA signing few company audit reports. Current year clients have not approached me for signing . I have not filed ADT 3. How am I to know if company has changed auditor. in MCA site , getting copies of financials is there but we can get it only after it is uploaded next month.Other e filing documents shows nil in MCA site.

  46. What happens if a private limited company crosses the threshold limit of 50 crores of paid up capital in between the year that after the AGM. How should I treat the rotation. Of auditors

  47. co. has failed to comply the procedure for appointment of new auditor and resignation of the existing one pls suggest the penal provision for non compliance of the same

    1. Kindly refer to Sec 147(1) of the Companies Act 2013, for the punishment of contravention made by the Company.
      As per the concerned Section: “If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the company shall be punishable with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 5,00,000 and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Rs. 10,000 but which may extend to Rs. 1,00,000, or with both.”

  48. Can we appoint auditor in private Company only for One year and do their re-appointment every year under Companies Act, 2013? as many private Companies still don’t want to appoint auditor for five years and re-appoint every year.. is this method of appointment correct? If, doing this practice of every year re-appointment can re-appoint same auditor for the terms of five years? and mid year provision of section 139(2) is applicable to the company than what term should we count for the appointment of auditors?

  49. as per the provision of rotation of auditor if individual auditor becomes partner in firm and is the new firm eligible for appointment as an auditor in company in which individual was earlier auditor wjose tenure of 5 year was completed?

    1. As per Section 139 (2) of the Companies Act, 2013, an individual auditor can hold office up to 5 years and a firm two terms of five consecutive years. You may like to see the appointment of firm to be considered as new appointment. But the question arises, will it tantamount to circumventing the legal restriction. Will one ask the very same question after 10 years when he gets appointed in another firm seeking appointment of that firm as the Auditor?

  50. our auditor has surrendered his COP. but due to some technical reasons his ADT-3 was not filed. now his membership number has been removed from ROC. how can ADT-3 be filed now. or what is other option.

  51. Hi Sir,
    This is eusuf a practicing CA , one of my clients is private company which had a loan of > 50 Cr as on 01.04.2014 . We have been auditors to it for the past 15 Yrs . So as on 01.04.2014 we are liable to retire by rotation . we had a cooling period of 3 years and we are liable to retire from 01.04.2017 . But as on 31.03.2017 my clients borrowings were < 50 Cr . So are we still need to retire by rotation ???

    1. The applicability of Rotation in case of Private companies is when it having a borrowing of 50 crore or more.
      So, it can be understood that when at the time of appointment the borrowing is below 50 crore, the provisions of Rotation shall not apply.

  52. our CA has resigned after our confirmation, he also has filled form ADT 3 in a time limit. We also appointed another CA. But yet not filled form ADT 1 . Now we again want to appoint our original CA. Is it possible. If yes. What is the procedure ? Can you guide ?

    1. Presuming the fact that the CA is not disqualified to act as a CA of your Company, you are required to accept the resignation of the current CA and appoint your previous CA. The process will flow similarly as in any other case.

  53. Company appointed Statutory Auditor (proprietor firm) for five years in its AGM. In first year, firm merged in a partnership firm. Board filled the casual vacancy by appointing newly partnership firm upto the AGM. In AGM newly partnership firm appointed for five years. Whether the said firm is eligible to appoint next second term ? If proprietor firm dissolve and merged with partnership firm after 3 years then newly partnership firm can appointed for two terms or not ?

    1. As per Section 139 (2) of the Companies Act, 2013, an individual auditor can hold office upto 5 years and a firm two terms of five consecutive years.

      It further provides that as on the date of appointment no audit firm having a common partner or partners to the other audit firm, whose tenure has expired in a company immediately preceding the financial year, shall be appointed as auditor of the same company for a period of five years.

      In your case, an individual auditor was appointed for 5 years, who merged with an auditors firm. His appointment shall be valid till 5 year from the date of his original appointment. And can’t be reappointed for another 5 years even though it has been reconstituted as a firm. The term of 5 years as applicable to individual auditor shall apply.

  54. shall i assume that sections 139(9) and 139(10) apply to companies which do not fulfill the criteria mentioned in section 139(2) ??

    1. Section 139(9) is an independent section and has to be complied with whenever an auditor is being re-appointed. Whereas, sec 139(10) is applicable only in cases where sec 139(2) is not applicable.

  55. There is abc firm, ca firm. This firm gets demerged into ABC and RPT. NOW FEW COMPANIES IN WHICH ABC WAS AUDITOR, THAT COMPANY WANTS RPT TO BE ITS AUDITOR BECAUSE OF ITS PARTNER AUDITOR.
    SO CAN THE COMPANY APPOINT RPT AS NEW AUDITOR BY GETTING ABC RESIGNED ???
    ALSO WILL ANY DISQUALIFICATION DUE TO COMMON PARTNER OR OLD PARTNER WOULD NOT CONTRACT.

    IMP: THERE ARE NO COMMON PARTNER NOW IN THE NEW DEMERGED FIRM.

    1. Yes, the company can appoint RPT as new auditor if ABC is ready to resign provided sec 139(2) is not applicable on such companies.In case it is applicable, none of the demerged firms can be appointed as auditor.

  56. 1.What happens when no AGM is held, whether auditor will continue?, But as per act appointment is not ratified.
    2. Act say if no auditor at agm is appointment or reappointed the existing auditor will continue, this provisions means what?

    1. 1. As per the recent NCLT decision in the case of SPC & Associates, Chartered Accountants vs. DVAK & Co. and the provisions of Companies (Amendment) Act, 2017 (yet to be notified), ratification of auditor is not relevant. In the light of recent amendments, the existing auditor will continue irrespective of ratification by the shareholders in the AGM.

      2. As per sec 139(10), the existing auditor will continue subject to non-applicability of rotation of auditors on the said company.

  57. I was the auditor in company,merged my ca firm in another.
    Now,I had resigned as partner from said CA firm resulting in withdrawal from said companies.
    Now, the existing CA firm which was appointed as stat auditors are not resigning from the post however,my client want to do same. How can Adt-3 be filed in such circumstances.
    How can I reappoint myself as my firm now.

    1. I can not resign as I am not the partner in such firm.
      I can not resign from back date either as I am not the partner in said firm and also to avoid additional fees from such date and penal provisions.
      ##REGARDING PENAL PROVISONS CAN U PLEASE ELABORATE WETHER TO FILE ADT-3 IS RESPONSIBILITY OF AUDITOR WHO SIGNED THE FINANCIALS OR APPOINTED FIRM## AS Mentioned earlier that the said firm is not ready to resign due to disputes.

      1. The auditor who has been appointed can only sign the financial statements of the Company. As per provisions of section 140 (2), it is his duty to file ADT-3 on his resignation and in case of any failure to file such form on part of auditor, he shall be made liable under section 140 sub section (3) of the Act.

    2. As per the provision of section 140 read with sub section 2, It shall be the duty of the resigning auditor to file ADT-3 within 30 days from the date of his resignation.
      Lastly, the company can also opt for removal of the Auditor before his tenure in accordance with the provisions of Section 140 of the Act, by obtaining approval from the tribunal and thereafter from shareholder.

  58. As per sec 139 (9) an auditor can be reappointed after expiry of his term but we know as per sec 139 (2) an auditor Can’t be reappointed after expiry of 5 years so my question is aren’t the 2 sub sections contradictory?

    1. Please note that pursuant to Section 139(1) of the Act, the Statutory Auditor of the Company can be appointed for the term of 5 years and can be reappointed for next term of 5 years except by the companies which are required to rotate auditors in compliance of Section 139(2). Section 139(9) lays down the additional conditions which are also required to be fulfilled by retiring auditor for his reappointment in addition 139 (2) of the Act. Therefore, both sub-sections are complementing each other rather than contradicting.

  59. My firm was the sole proprietorship firm. It was appointed as the auditor of the pvt ltd. Now my firm was merged with the another CA Firm. Please guide me if any compliance has to be done(but i am only the auditor) and firm PAN number is changed(as it is now partnership firm).

    1. As per the Companies Act, 2013, there is no compliance required to be done. But as a precautionary measure, you may attach a clarification letter while filing AOC-4 mentioning the details of merger with another firm and the changes that are applicable due to the said merger.

  60. In case of casual vacancy if auditor is appointed in egm till the conclusion of agm and adt 1 is filed.then their is need to file adt 1 in agm if same auditor is appointed?

  61. If we appoint auditor for 5 years in agm but in form adt 1 tenure of appointment is wrote only for 1 year.
    Then form adt 1 valid for 1 year or for 5 year.
    Is need to file adt 1 next year for 4 years.
    Pls reply its urgent

    1. As per companies act, 2013, an auditor is to be appointed for a period of 5 years. In the given case the appointment shall be valid for the period mentioned in the form, so in order to rectify it you can file ADT-1 again and attach a declaration stating the rectification that is to be made and other necessary attachments.

  62. can an auditor be appointed for a term of less than 5 years under CA 2013. ?? and if back date compliances are made, can an auditor be appointed for a period of 5 years under CA 1956??

    1. No there is no provision related to the appointment of an auditor for less than 5 years under Companies Act of 2013, it is only permissible if the specified section is in transitional phase.
      As per section 224 of Companies Act,1956 auditors were appointed at every annual general meeting till the conclusion of next annual general meeting, hence the back dated compliances cannot be done .

    1. The provisions governing the term of Auditor under section 139 (2) clearly states that term shall means “five consecutive years”, However in case of any casual vacancy Board of Directors can appoint another auditor who shall hold the office till the conclusion of the next annual general meeting. As per our understanding, appointment of Auditor in case of casual vacancy shall not be considered as one term for the provisions of Section 139 sub section 2 of the Act.

  63. Sir i have query regarding term of auditor. My company has appointed auditor on agm dtd 30 Sep 2014 mentioning appointment for FY 2014-15 i.e. for one year. Do the company needs resignation letter of the auditor for FY 2015-16 or his term will automatically be terminated.?? Please guide.

    1. In this case, casual vacancy is due to reason other than resignation of Auditor. In this case, BoD has the power to appoint auditor to fill the vacancy within a period of 30 days. Appointment can be made by passing B/R in the board meeting or through circular resolution. Form ADT-1 needs to be filed within 15 days of appointment.
      It is recommended that the adjustment be approed by board resolution

  64. casual vacancy arises due to resignation of auditor on 03/09/2017,
    my question is casual vacancy can be filled in annual genral meeting held on 30 september 2017

    1. As per Section 139(8), any casual vacancy in the office of an auditor due to resignation shall be filled by the Board of Directors within 30 days and such appointment shall also be approved by the company at a general meeting convened within 3 months of such appointment. Therefore in this case, it is suggested that the new auditor be appointed by the Board.

  65. Can we appoint auditor in private Company only for One year and do their re-appointment every year under Companies Act, 2013? as many private Companies still don’t want to appoint auditor for five years and re-appoint every year.. is this method of appointment correct?

    1. As per Section 139 (1) of the Companies Act, 2013, an auditor shall hold office from the conclusion of the meeting in which he is appointed till the conclusion of sixth annual general meeting and thereafter shall be appointed till the conclusion of every sixth meeting. Therefore, the auditor’s term shall be of 5 years.

  66. The tenure of 5 years of statutory auditor has been expired on 29.09.2017 , and company has not appointed auditor at next AGM held on 29.09.2017. So can we appoint Auditor in the next EGM to be held on 22.12.2017?

  67. My co. doesn’t fall in Sec-139(2) of CA, 2013. I want to re-appoint my auditor for a period of only 2 years. so Can A Statutory Auditor be appointed for a period of less than 5 years as stated in Sec-139(1)?because the section read as, “who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting”

    1. As per Section 139 (1) Subject to the provisions of this Chapter, every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as may be prescribed:

      After careful reading it can be deduced that a Company shall appoint auditors for term of 5 years. Such an appointment can’t be made for a period lesser than five years.

      A Company not covered section 139(2) is not required to comply with provisions relating rotation of auditor. However, it mustn’t be construed so as to mean that these companies can appoint Auditors for term of lesser than five/ten years as the case may be.

  68. Sub : – Appointment of Statutory Auditor

    Company A ( not fall under the preview of Section 139(2) not under prescribed class of company) appoint / re-appoint same Audit firm as stat auditor in AGM of 2014-15,2015-16 & 2016-17 for term of 1 year & file ADT-1 in this respect, what should we do in this case

    1. In case your company does not fall under the prescribed class of company in Companies (Audit and Auditor) Second amendment rules, 2017, then you have the relaxation from the provision of rotation of the Statutory Auditor. However, ADT- 1 is required to be filed for the term of every 5 Year.

      1. If listed company has appointed a stat auditor and before the completion of his term of 5 yes, auditor resigned before 4th AGM so it becomes a case of casual vacancy. Now my question is whether company can appoint the same auditor in 4th or subsequent AGM

        1. In this case, casual vacancy is due to resignation of Auditor. As per Sec 139 (8) of companies act, 2013, appointment shall be approved by the company at a general meeting convened within three months of the recommendation of the Board. The compny can appoint the same person as auditor if he fulfilles the prescribed criteria. The auditor so appointed shall hold the office till the conclusion of the next annual general meeting

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