Form ADT-2 is an application by the company seeking approval from the Regional Director/ Registrar of Companies for Removal of Auditor from the office before the expiry of the term of office.

As per section 140 of Companies Act, 2013, the company can remove an auditor before the expiry of his or her term by passing a special resolution. Moreover, Company can be pass special resolution after obtaining prior approval from the central government by filing an application along with Form ADT-2 as an attachment.

However, before initiating the procedure u/s 140 for removal, the company has to give the auditor opportunity of being heard.

Form ADT-2 should specify the following things

• Ground of seeking removal of auditor
• Whether the accounts have been qualified during last three years
• Date of appointment of auditor and SRN of notice of such appointment
• Status of payment of Audit Fees

SRN number of filing ADT-1 is a requirement for getting approval of central government. So the companies have to file ADT- 1 before uploading ADT- 2.

Steps that a company can follow for the removal of auditors.

• Conduct a board meeting to pass a resolution for the removal of the auditor.
• Auditor has to be given a reasonable opportunity of being heard. This provision was not there in the old companies act 1956. But now it’s mandatory to give a reasonable opportunity of being heard to the auditor.
• Apply for Central government approval within 30days from the date of passing board resolutions in e-Form ADT2 as an attachment to e-Form RD1.
• After getting approval, the company is required to hold a general meeting within 60 days from the date of approval to pass a special resolution approving the central government’s approval.

For getting such approval, the company has to file e-Form ADT2 as an attachment to e-Form RD1 for approval of the regional director i.e. the central government. Such e-Forms are required to accompany with fees as specified under the companies (registration office and fees) Rules, 2014.

Removal Of Auditor By Tribunal Or On An Application Made By The Central Government

A National Company Law Tribunal can either-

• On an application from the Central Government or,
• On an application from Person concerned or,
• Suo Motto basis

Can order the Company to change the Auditor, if it is of the view that the Auditor of a Company has whether directly/ indirectly acted fraudulently or supported or conspire in any fraud by or in relation –

• Company
• its directors or
• Officers than the Tribunal may, by order, direct the Company to remove its auditors.

In case the Central Government makes the application, and the NCLT is satisfied that the Auditor’s change is required, it shall, within 15 days of receipt of the application, make a judgment that the Auditor shall not serve as the Auditor of the Company and central government may appoint another auditor in his place.

The Auditor against whom NCLT has passed the final order for removal under section 140 cannot serve any company as an auditor for five years from the date on which the judgement was passed.