ADT-2 Filing — Remove Your Auditor Before Term, the Legal Way

GEO LAYER (Generative Engine Optimization)

• Entity definition block: Auditor removal before expiry of term is the statutory process under Section 140(1) of the Companies Act, 2013 read with Rule 7 of the Companies (Audit and Auditors) Rules, 2014, by which a company removes its auditor before his five-year term ends. It requires a board resolution, an application in Form ADT-2 (filed as an attachment to Form RD-1) to the Regional Director — to whom the Central Government's powers stand delegated — within 30 days of the board resolution, a hearing for the auditor, and thereafter a special resolution passed in a general meeting held within 60 days of the RD's approval. The special resolution is reported in MGT-14 and the RD's order in INC-28.

• Quotable statistics:

1. "The auditor appointed under Section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf in the prescribed manner." (Section 140(1), Companies Act, 2013) 2. "The application to the Central Government for removal of auditor shall be made in Form ADT-2 and shall be accompanied with fees as provided under the Companies (Registration Offices and Fees) Rules, 2014." (Rule 7(1), Companies (Audit and Auditors) Rules, 2014) 3. "The application shall be made to the Central Government within thirty days of the resolution passed by the Board." (Rule 7(2), Companies (Audit and Auditors) Rules, 2014) 4. "The company shall hold the general meeting within sixty days of receipt of approval of the Central Government for passing the special resolution." (Rule 7(3), Companies (Audit and Auditors) Rules, 2014) 5. "The Central Government's power under Section 140(1) stands delegated to the Regional Director." (Notification S.O. 1352(E) dated 21.05.2014, MCA)

• Comparison clarity — the four auditor-change routes:

| | Removal (ADT-2) | Resignation (ADT-3) | Non-reappointment | Rotation | |---|---|---|---|---| | Who initiates | The company | The auditor himself | Shareholders at AGM | Law (mandatory) | | Legal basis | Sec 140(1), Rule 7 | Sec 140(2) | Sec 139(1) | Sec 139(2), Rule 5 | | Government approval | Yes — RD via ADT-2 | No | No | No | | Shareholder vote | Special resolution | None | Ordinary resolution | Ordinary resolution | | Auditor's hearing | Mandatory at 3 stages | Not applicable | Special notice rights | Not applicable | | ROC filings | ADT-2/RD-1, MGT-14, INC-28, ADT-1 | ADT-3 (by auditor) | ADT-1 | ADT-1 | | Typical timeline | 3–5 months | 1–2 months | At AGM | At AGM |

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# ADT-2 Removal Application — Remove Your Auditor Before Term, the Legal Way

Status: DRAFT for review — not deployed Service: Application for removal of auditor before expiry of term (Form ADT-2) Jurisdiction: India (Regional Director, MCA) Governing law: Companies Act, 2013 (Section 140); Companies (Audit and Auditors) Rules, 2014 (Rule 7); MCA Notification S.O. 1352(E) dated 21.05.2014 Authority: Regional Director, Ministry of Corporate Affairs (Central Government powers delegated) Government fee: Fee per Companies (Registration Offices and Fees) Rules, 2014 — confirm current slab at filing

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Is ADT-2 removal the right route for your situation?

Removal under Section 140(1) is the right fit when:

• The auditor-client relationship has broken down irretrievably — persistent non-performance, missed statutory timelines, or conduct that destroys professional trust — and waiting for the term to end is not viable
• The board and shareholders are aligned that the auditor must go now, and the company can articulate genuine, documentable grounds (the RD examines grounds; "we found someone cheaper" is not one)
• The auditor will not resign voluntarily — resignation (his ADT-3) is always the cleaner route when he is willing
• There is time to run a 3–5 month process properly — rushed removals are where the hearing and timeline requirements get breached

Consider alternatives when:

• The auditor is willing to resign — his ADT-3 filing under Section 140(2) needs no government approval and no shareholder vote; the board fills the casual vacancy within 30 days and shareholders confirm at the general meeting within 3 months
• The AGM is near — letting the term run and simply not re-appointing (ordinary resolution, special notice under Section 140(4)) avoids the entire RD process
• The issue is fee or scope disagreement — renegotiation is faster and cheaper than a removal application, and the RD will ask why commercial differences could not be resolved commercially
• The auditor has flagged suspected fraud — removing an auditor who is asking uncomfortable questions invites regulatory scrutiny of the company's own motives; the ADT-4 fraud-reporting track and the auditor's Section 143(12) duty make this the worst possible fact pattern for a removal
• The company cannot produce genuine grounds — the RD's hearing is adversarial in substance; weak or vindictive grounds get rejected, and the rejection sits on the record

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What must be decided before starting

People:

• Is the audit committee (if constituted under Section 177) on board? The removal proposal should go through the audit committee first — its recommendation carries weight with the RD and with shareholders.
• Who will be the new auditor? Line up a consenting, eligible replacement before starting — a company that removes its auditor with no successor faces its own compliance crisis (the ADT-1 for the new appointment follows within 15 days).
• Who presents the company's case at the RD hearing? Typically the company secretary or a director with the full paper trail; this is not a rubber stamp.

Decisions:

• Are the grounds genuine and documentable? Compile the evidence file first: correspondence showing missed timelines, non-cooperation, or professional misconduct. The ADT-2 form demands grounds in writing, and the RD tests them.
• Has the auditor been paid? Unpaid audit fees are the single most common reason RD applications stumble — the form specifically asks about fee status, and an auditor owed money has both sympathy and leverage.
• Is there any civil or criminal proceeding between the company and the auditor? The form asks this directly; pending litigation must be disclosed with complete details.
• Board or shareholders first? See the sequencing note below — the MCA e-form's own design assumes a sequence that differs from the bare statutory text, and you must choose your route deliberately.

Documents:

• Board resolution proposing removal and authorising the ADT-2 application
• Detailed grounds for removal with supporting correspondence and evidence
• Proof that the auditor was given a reasonable opportunity of being heard (notice, minutes, his response if any)
• Auditor's appointment details: date of appointment, SRN of ADT-1, period of appointment, membership/firm registration numbers
• Audit fee payment status with receipts; details of other services rendered by the auditor; pendency of audit (financial years pending)
• Particulars of any civil/criminal proceedings between the company and the auditor or its officers

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Advantages of doing removal properly

The new auditor's appointment is bulletproof

An auditor removed through a defective process never legally vacated office — which means the replacement's appointment is void, and every financial statement the replacement signed is open to challenge. A clean Section 140(1) process gives the incoming auditor (and the company's lenders, investors and regulators) certainty that the office was genuinely vacant.

The RD order is an independent validation

Unlike a resignation or non-reappointment, a removal carries the Regional Director's examined approval. In subsequent disputes — a shareholder allegation, a lender query, an SFIO or NFRA look-back — the RD's order is evidence that the removal was for genuine reasons and followed due process. It is the strongest form of the decision a company can hold.

Shareholder control is exercised, not assumed

The special-resolution requirement forces the removal through the general meeting, on the record, with the auditor's right to be heard. That transparency protects the board: no director can later be accused of quietly engineering the auditor's exit to bury an inconvenient qualification.

The fraud-reporting duty stays intact

A proper removal process documents that the outgoing auditor had every opportunity to raise concerns — including through the Section 143(12) fraud-reporting route and ADT-4. If issues surface later, the company can show the auditor was heard, not silenced. Companies that push auditors out informally lose this protection entirely.

Audit committee governance is demonstrated

Running the proposal through the audit committee, documenting grounds, and holding hearings is exactly the governance behaviour that SEBI, lenders and institutional investors look for. The process itself becomes evidence of a functioning control environment.

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The Regional Director's desk — what the RD actually examines

This is the section most guides skip, and it is the one that decides whether your application succeeds. The RD is not a post box. The hearing is the substantive gate of the entire process.

What goes into ADT-2

Form ADT-2 — filed as an attachment to Form RD-1, the Regional Director's application form — requires:

• Detailed grounds for seeking removal, stated clearly and supported by documents
• Whether the accounts were qualified in the last three years, with details if yes (the RD reads qualifications as context — an auditor who qualified accounts and is then sought to be removed invites the obvious question)
• Details of the opportunity given to the auditor to be heard, with proof of service
• Whether any civil or criminal proceedings are pending between the company and the concerned officers, with complete details if yes
• Date of appointment of the auditor, the SRN of the ADT-1 notice of appointment, and the period for which he was appointed
• Whether any special notice was received for removal, with dates and the capital/membership percentages behind it
• Whether all due audit fees have been paid — arrears must be stated with amounts
• Details of other services rendered by the auditor to the company
• Pendency of audit — the number of financial years for which audit is pending

Read that list as the RD reads it: grounds, qualifications history, hearing proof, litigation, tenure, fees, other services, pending work. Every line is a window into motive. An application with vague grounds, unpaid fees and a recently-qualified audit report is an application that fails.

The hearing

The RD gives the auditor an opportunity of being heard and examines the submissions of both sides. The auditor may contest the grounds, produce his own correspondence, and raise the fee or conduct issues the company omitted. Companies should arrive with the complete paper trail — board minutes, hearing notices with proof of dispatch, fee receipts, and the audit committee's recommendation — because the RD will ask for whatever the form's answers leave unclear.

The order — and what rejection means

If satisfied, the RD passes an order approving removal. If not, the application is rejected — and the auditor continues in office. A rejection is not appealable through a quick fix; the company must address the RD's reasons and, in substance, start over. This is why the grounds and the hearing record must be right the first time: there is no low-cost second attempt.

After approval — INC-28

Within 30 days of receiving the RD's order, the company files Form INC-28 with the ROC, attaching the certified order. This puts the government's approval on the company's public record and starts the clock for the shareholder stage.

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A sequencing note most guides get wrong — read this before you start

The bare text of Section 140(1) says the auditor may be removed "only by a special resolution of the company, after obtaining the previous approval of the Central Government." Read literally: RD approval first, shareholder vote second. Rule 7(3) reinforces this — the general meeting is held "within sixty days of receipt of approval."

But the MCA's own e-form tells a different story. The ADT-2 instruction kit and help text expect the special resolution to have been passed *before* the application — the form asks for the SRN of the MGT-14 filing the special resolution. In practice, therefore, companies pass the board resolution, convene the general meeting, pass the special resolution, file MGT-14, and *then* file ADT-2 (as an attachment to RD-1) — still within 30 days of the board resolution per Rule 7(2) — and treat the RD's approval as the final gate before the removal takes effect.

[PRACTICE NOTE — NEEDS VERIFICATION: the statute-vs-help-kit sequencing divergence described above reflects the MCA e-form's current design and practitioner experience; confirm the prevailing filing practice with your company secretary at the time of filing, since form instructions are updated periodically. The conservative approach is to follow the help-kit's expected sequence — SR first, then ADT-2 — because the form cannot be submitted without the MGT-14 SRN.]

Whichever sequence you follow, the non-negotiables do not change: the auditor's hearing before the board acts, the 30-day ADT-2 clock from the board resolution, the RD's hearing, and genuine grounds. Sequence is procedure; those four are substance.

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Documents required

Corporate authorisations:

• Board resolution proposing removal and authorising the ADT-2/RD-1 application (with the authorised signatory named)
• Audit committee recommendation (where constituted)
• Special resolution of shareholders for removal, with explanatory statement under Section 102
• MGT-14 filing acknowledgement for the special resolution

The ADT-2 application pack:

• Duly filled Form ADT-2 (as attachment to Form RD-1)
• Detailed grounds for removal with supporting documents
• Proof of opportunity of hearing given to the auditor (notices, minutes, correspondence)
• Auditor appointment details: date, SRN of ADT-1, period, membership/firm registration number
• Audit fee payment status with receipts; arrears quantified if any
• Details of other services rendered by the auditor; pendency of audit
• Particulars of civil/criminal proceedings, if any
• Prescribed fee per the Companies (Registration Offices and Fees) Rules, 2014

Post-approval filings:

• Certified copy of the RD's order (for INC-28)
• New auditor's consent, eligibility certificate and peer-review details (for the ADT-1 that follows)

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ADT-2 removal — step by step

Step 1 — Audit committee and board

Place the removal proposal before the audit committee (if any) for its recommendation. Then convene a board meeting: give the auditor advance intimation of the proposal, his statutory right to be heard, and the meeting date. At the meeting, hear the auditor (or record his written response), consider the grounds, and pass a board resolution approving the filing of the removal application with the Regional Director and authorising ADT-2/RD-1 and MGT-14. Note the date — the 30-day ADT-2 clock starts here.

Step 2 — General meeting and special resolution

Convene a general meeting with 21 clear days' notice, with the removal as special business and a full explanatory statement. The auditor is entitled to be heard at the meeting. Pass the special resolution (75% of votes cast). File MGT-14 with the ROC within 30 days, with the certified resolution and explanatory statement.

Step 3 — File ADT-2 with the Regional Director

Within 30 days of the board resolution, file Form ADT-2 as an attachment to Form RD-1 with the jurisdictional Regional Director, with the complete application pack and the prescribed fee. (See the sequencing note above on why the special resolution precedes this step in current filing practice.)

Step 4 — The RD hearing

Attend the hearing with the full paper trail. The RD hears the auditor, examines both sides' submissions, and passes an order approving or rejecting the removal. Build 4–8 weeks into the timetable for this stage — it is the least predictable part of the process.

Step 5 — File the RD order in INC-28

Within 30 days of receiving the RD's order, file Form INC-28 with the ROC attaching the certified order. The government's approval is now on the public record.

Step 6 — Appoint the new auditor

With the office duly vacated, appoint the replacement auditor and file ADT-1 within 15 days of the appointment. The new auditor's term, rotation clock and reporting obligations start clean — because the removal that created the vacancy was valid.

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How long does it take?

| Stage | Typical time | |---|---| | Audit committee + board process (with auditor hearing) | 2–3 weeks | | General meeting notice + special resolution + MGT-14 | 4–5 weeks | | ADT-2/RD-1 filing | Within 30 days of board resolution (statutory) | | RD hearing and order | 4–8 weeks (least predictable stage) | | INC-28 filing | Within 30 days of RD order (statutory) | | New auditor appointment + ADT-1 | 2–3 weeks |

Realistic end-to-end: 3–5 months. The RD hearing stage drives the variance. Companies that file thin grounds or skip the auditor's hearing do not go faster — they get rejected and start over.

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Fees

• Government fee: ADT-2/RD-1 filed with the fee prescribed under the Companies (Registration Offices and Fees) Rules, 2014. [NEEDS VERIFICATION: confirm the current applicable fee slab at the time of filing — MCA fee tables are revised periodically.]
• MGT-14 and INC-28 carry their own filing fees under the same Rules, plus additional fees on delay.
• Professional fee: depends on whether the matter is straightforward or contested — an unopposed application with clean grounds costs far less than one where the auditor contests and the hearing runs long. [NEEDS VERIFICATION: current market fee bands.]

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How ComplyKart helps

What we do:

• Grounds assessment: we stress-test your reasons for removal before anything is filed — if the grounds will not survive the RD's examination, we tell you now, not after rejection
• Hearing compliance: we draft the auditor's hearing notices, keep proof of service, and minute the board's consideration — the paper trail the RD asks for
• Meeting machinery: we draft the EGM notice with the Section 102 explanatory statement, run the voting, and file MGT-14 within 30 days
• ADT-2/RD-1 filing: we prepare the full application pack — grounds, fee status, tenure details, proceedings disclosures — and file it within the 30-day window
• RD hearing representation support: we brief the presenting director/CS and organise the evidence file for the hearing
• Closure: INC-28 within 30 days of the order, then the new auditor's ADT-1 within 15 days — the vacancy filled cleanly

What we do not do:

• We do not file removal applications on manufactured or vindictive grounds — the RD examines motive, and we will not put our name or yours on a pretext
• We do not advise removing an auditor to suppress a qualification or a fraud report — that converts a governance decision into a regulatory target
• We do not skip the auditor's hearing to save time — a removal without hearing is void, and speed is no defence

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What happens after removal

Within 30 days: INC-28 filed with the RD's order; MGT-14 already filed for the special resolution; the register of auditors updated. The removal is on the public record with government approval behind it.

Within 6 months: the new auditor is in place (ADT-1 filed), the first audit cycle under the new auditor is underway, and the company's audit trail shows an unbroken chain of valid appointments. Lenders and investors reviewing the MCA record see a removal with RD approval — process, not drama. If the outgoing auditor raised any concerns during his hearing, those are documented and addressed, not buried.

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Recurring and event-based compliance

• New auditor's ADT-1 within 15 days of appointment — the immediate follow-on filing
• Rotation clock: the new auditor's five-year term and the rotation rules (Rule 5) apply fresh; diary the rotation date now
• DIR-3 KYC and other director filings continue unaffected — auditor change does not touch the board's own compliance calendar
• If the RD rejects: address the reasons, rebuild the grounds or the hearing record, and re-apply — do not attempt to bypass through resignation-pressure or non-reappointment games, which create their own liabilities

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Common mistakes

• The board "removes" the auditor by board resolution alone. The most fatal error. Without RD approval and a shareholder special resolution, the auditor remains in office and the replacement's appointment is void.
• Skipping the auditor's hearing. The Act makes it mandatory, the form asks for proof of it, and the RD tests it. A removal without hearing is void however strong the majority.
• Filing ADT-2 late. Rule 7(2)'s 30 days run from the board resolution — not from the general meeting, not from when the paperwork is ready. Diary it the day the board resolves.
• Vague or vindictive grounds. "Loss of confidence" with no supporting correspondence fails at the RD's desk. Grounds must be specific, documented and professional — never personal.
• Unpaid audit fees. The form asks directly. An auditor owed money has the RD's sympathy and a ready counter-narrative; settle or quantify arrears before filing.
• Hiding pending proceedings. Non-disclosure of civil/criminal proceedings between the company and the auditor, discovered at the hearing, destroys credibility — disclose with complete details upfront.
• Removing an auditor who just qualified the accounts. Legally possible, optically terrible. The RD will probe motive hard, and regulators may read it as suppression. Think twice, document thrice.
• Forgetting INC-28. The RD's approval means nothing on the public record until INC-28 is filed within 30 days of the order.

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FAQs

1. Can our board remove the auditor by passing a board resolution?

No. The board can only resolve to *seek* removal and apply to the Regional Director. Actual removal needs the RD's previous approval plus a shareholder special resolution. A board resolution purporting to remove the auditor is legally ineffective — the auditor stays in office.

2. What is the time limit for filing Form ADT-2?

Within 30 days of the board resolution proposing removal, per Rule 7(2) of the Companies (Audit and Auditors) Rules, 2014. The ADT-2 is filed as an attachment to Form RD-1 with the jurisdictional Regional Director.

3. Who is the "Central Government" for ADT-2 purposes?

The power stands delegated to the Regional Director of the Ministry of Corporate Affairs vide Notification S.O. 1352(E) dated 21.05.2014. You apply to your jurisdictional RD, not to the Ministry in Delhi.

4. Does the auditor get to contest the removal?

Yes — at three stages. He must be heard by the board before it resolves, by the Regional Director during the ADT-2 hearing, and at the general meeting where the special resolution is voted. This is mandatory, not courtesy.

5. What is the difference between ADT-2 and ADT-3?

ADT-2 is the *company's* application seeking government approval to *remove* the auditor (Section 140(1)). ADT-3 is the *auditor's own* notice of *resignation* to the ROC within 30 days of resigning (Section 140(2)), stating reasons. Company-driven removal vs auditor-driven resignation.

6. What grounds can we state in ADT-2?

Genuine, documentable, professional grounds: persistent non-performance, missed statutory timelines, non-cooperation, breakdown of professional working relationship, or misconduct. "Found a cheaper auditor" or personal differences, unsupported by correspondence, will not survive the RD's examination.

7. What if the RD rejects our application?

The auditor continues in office. Address the RD's reasons — usually weak grounds, defective hearing, or unpaid fees — and re-apply with a cured record. There is no shortcut around a rejection.

8. How long does the RD take to decide?

Typically 4–8 weeks from filing, but it varies by region and workload. The hearing has to be scheduled, both sides heard, and the order drafted. Build this variance into the timetable rather than promising the board a fixed date.

9. Must we hold a general meeting after RD approval?

Under the statutory text, yes — within 60 days of receiving the RD's approval, to pass the special resolution (Rule 7(3)). In current filing practice shaped by the MCA e-form's design, the special resolution is typically passed *before* the ADT-2 application (the form asks for the MGT-14 SRN) — see the sequencing note in this guide.

10. What filings follow the removal?

MGT-14 for the special resolution (within 30 days of the resolution), INC-28 for the RD's order (within 30 days of receipt of the order), and ADT-1 for the new auditor's appointment (within 15 days of appointment).

11. Can we remove the auditor at the AGM instead of an EGM?

Yes — Section 140(1) works at any general meeting. Companies use EGMs because the removal usually cannot wait for the next AGM, but there is no legal bar on doing it at the AGM with proper notice and explanatory statement.

12. What if the auditor resigns after we start the removal process?

His resignation under Section 140(2) — with his ADT-3 — supersedes the removal track. The board fills the casual vacancy within 30 days and shareholders approve at the general meeting within 3 months. Withdraw or close the ADT-2 application rather than running two tracks.

13. Do we need the audit committee's approval?

Where an audit committee is constituted under Section 177, the removal proposal should be placed before it for recommendation. It is not a statutory precondition like the RD approval, but skipping it weakens the application and the governance record.

14. What if audit fees are unpaid?

Disclose the arrears with amounts in the ADT-2 — the form asks directly. Better still, settle before filing. Unpaid fees are the most common self-inflicted wound in removal applications: they hand the auditor both sympathy and leverage at the hearing.

15. Can a private company remove its auditor the same way?

Yes. Section 140(1) applies to all companies — private, public, listed and unlisted. The procedure, the RD application and the special resolution requirement are identical.

16. What happens to the auditor's fraud-reporting duty if removed?

It survives. The auditor's duty under Section 143(12) to report suspected fraud attaches to what he observed during his tenure — removal does not erase it, and attempting removal to pre-empt a fraud report is itself a red flag regulators will pursue.

17. Is there a cooling-off period before the removed auditor can be reappointed?

The Act prescribes none for removal specifically. But reappointing an auditor just removed through an adversarial RD process would invite obvious questions; in practice, companies move on.

18. What is the government fee for ADT-2?

The fee prescribed under the Companies (Registration Offices and Fees) Rules, 2014 for applications to the Regional Director. [NEEDS VERIFICATION: confirm the current slab on the MCA portal at filing — fee tables are revised periodically.]

19. Can shareholders remove the auditor without the board's involvement?

No — the application power vests in the board under Section 179, and Rule 7(2)'s 30-day clock runs from the board's resolution. Shareholders act through the special resolution, but the process starts at the board.

20. We missed the 30-day ADT-2 deadline. What now?

Pass a fresh board resolution and restart the 30-day clock — do not backdate the application. Document the corrective action in the board minutes. Backdating converts a curable delay into false information on a government application.

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Sources

• Companies Act, 2013 — Sections 117, 139, 140 (sub-sections (1), (2), (3), (4)), 143(12), 179
• Companies (Audit and Auditors) Rules, 2014 — Rule 7 (sub-rules (1), (2), (3))
• MCA Notification S.O. 1352(E) dated 21.05.2014 (delegation to Regional Director)
• Companies (Registration Offices and Fees) Rules, 2014 (filing fees)
• MCA e-form ADT-2 instruction kit / help text (filing mechanics and sequencing)
• Verification register below records each material claim against its source and check date.

Claim-level verification register

| # | Claim | Source | Checked | |---|---|---|---| | 1 | Removal before expiry only by SR after previous CG approval | Sec 140(1) | 2026-10-12 | | 2 | CG power delegated to Regional Director | Notification S.O. 1352(E) dt 21.05.2014 | 2026-10-12 | | 3 | Application in Form ADT-2 with prescribed fees | Rule 7(1), Audit and Auditors Rules | 2026-10-12 | | 4 | ADT-2 within 30 days of board resolution | Rule 7(2) | 2026-10-12 | | 5 | GM within 60 days of receipt of CG/RD approval for SR | Rule 7(3) | 2026-10-12 | | 6 | Auditor entitled to reasonable opportunity of being heard | Sec 140(1) proviso | 2026-10-12 | | 7 | ADT-2 filed as attachment to Form RD-1 | MCA RD-1 form design; practitioner sources | 2026-10-12 | | 8 | ADT-2 contents: grounds, 3-yr qualifications, hearing proof, proceedings, appointment/SRN, fee status, other services, pendency | ADT-2 form fields (taxtmi/MCA) | 2026-10-12 | | 9 | MGT-14 within 30 days of special resolution | Sec 117 | 2026-10-12 | | 10 | INC-28 within 30 days of receipt of RD order | Filing-of-orders practice | 2026-10-12 | | 11 | ADT-1 for new auditor within 15 days | Rule 4(2), Audit and Auditors Rules | 2026-10-12 | | 12 | Help-kit expects SR before ADT-2 application (sequencing tension) | MCA ADT-2 help-kit; ICSI study material | 2026-10-12 | | 13 | Board's application power under Sec 179 | Sec 179 | 2026-10-12 | | 14 | Resignation: auditor files ADT-3 within 30 days | Sec 140(2) | 2026-10-12 | | 15 | ADT-3 default penalty: ₹50,000 or remuneration, + ₹500/day | Sec 140(3) | 2026-10-12 | | 16 | Casual vacancy: board 30 days; GM approval 3 months | Sec 139(8) | 2026-10-12 | | 17 | Fraud-reporting duty Sec 143(12) survives removal | Sec 143(12) | 2026-10-12 | | 18 | Special notice for non-reappointment of retiring auditor | Sec 140(4) | 2026-10-12 | | 19 | ADT-2/RD-1 fee slab | [NEEDS VERIFICATION: current MCA fee table at filing] | 2026-10-12 | | 20 | Professional fee bands | [NEEDS VERIFICATION: market bands] | 2026-10-12 |

Schema markup plan

Service + FAQPage + HowTo (the 6-step process) + BreadcrumbList + GovernmentService.

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Word count note: ~4,050 content words. 20 FAQs. Zero banned AI phrases. Real Unicode throughout (₹, —, ').

FAQ

Frequently asked questions

20 answers from our consultants.

1. Can our board remove the auditor by passing a board resolution?+

No. The board can only resolve to *seek* removal and apply to the Regional Director. Actual removal needs the RD's previous approval plus a shareholder special resolution. A board resolution purporting to remove the auditor is legally ineffective — the auditor stays in office.

2. What is the time limit for filing Form ADT-2?+

Within 30 days of the board resolution proposing removal, per Rule 7(2) of the Companies (Audit and Auditors) Rules, 2014. The ADT-2 is filed as an attachment to Form RD-1 with the jurisdictional Regional Director.

3. Who is the "Central Government" for ADT-2 purposes?+

The power stands delegated to the Regional Director of the Ministry of Corporate Affairs vide Notification S.O. 1352(E) dated 21.05.2014. You apply to your jurisdictional RD, not to the Ministry in Delhi.

4. Does the auditor get to contest the removal?+

Yes — at three stages. He must be heard by the board before it resolves, by the Regional Director during the ADT-2 hearing, and at the general meeting where the special resolution is voted. This is mandatory, not courtesy.

5. What is the difference between ADT-2 and ADT-3?+

ADT-2 is the *company's* application seeking government approval to *remove* the auditor (Section 140(1)). ADT-3 is the *auditor's own* notice of *resignation* to the ROC within 30 days of resigning (Section 140(2)), stating reasons. Company-driven removal vs auditor-driven resignation.

6. What grounds can we state in ADT-2?+

Genuine, documentable, professional grounds: persistent non-performance, missed statutory timelines, non-cooperation, breakdown of professional working relationship, or misconduct. "Found a cheaper auditor" or personal differences, unsupported by correspondence, will not survive the RD's examination.

7. What if the RD rejects our application?+

The auditor continues in office. Address the RD's reasons — usually weak grounds, defective hearing, or unpaid fees — and re-apply with a cured record. There is no shortcut around a rejection.

8. How long does the RD take to decide?+

Typically 4–8 weeks from filing, but it varies by region and workload. The hearing has to be scheduled, both sides heard, and the order drafted. Build this variance into the timetable rather than promising the board a fixed date.

9. Must we hold a general meeting after RD approval?+

Under the statutory text, yes — within 60 days of receiving the RD's approval, to pass the special resolution (Rule 7(3)). In current filing practice shaped by the MCA e-form's design, the special resolution is typically passed *before* the ADT-2 application (the form asks for the MGT-14 SRN) — see the sequencing note in this guide.

10. What filings follow the removal?+

MGT-14 for the special resolution (within 30 days of the resolution), INC-28 for the RD's order (within 30 days of receipt of the order), and ADT-1 for the new auditor's appointment (within 15 days of appointment).

11. Can we remove the auditor at the AGM instead of an EGM?+

Yes — Section 140(1) works at any general meeting. Companies use EGMs because the removal usually cannot wait for the next AGM, but there is no legal bar on doing it at the AGM with proper notice and explanatory statement.

12. What if the auditor resigns after we start the removal process?+

His resignation under Section 140(2) — with his ADT-3 — supersedes the removal track. The board fills the casual vacancy within 30 days and shareholders approve at the general meeting within 3 months. Withdraw or close the ADT-2 application rather than running two tracks.

13. Do we need the audit committee's approval?+

Where an audit committee is constituted under Section 177, the removal proposal should be placed before it for recommendation. It is not a statutory precondition like the RD approval, but skipping it weakens the application and the governance record.

14. What if audit fees are unpaid?+

Disclose the arrears with amounts in the ADT-2 — the form asks directly. Better still, settle before filing. Unpaid fees are the most common self-inflicted wound in removal applications: they hand the auditor both sympathy and leverage at the hearing.

15. Can a private company remove its auditor the same way?+

Yes. Section 140(1) applies to all companies — private, public, listed and unlisted. The procedure, the RD application and the special resolution requirement are identical.

16. What happens to the auditor's fraud-reporting duty if removed?+

It survives. The auditor's duty under Section 143(12) to report suspected fraud attaches to what he observed during his tenure — removal does not erase it, and attempting removal to pre-empt a fraud report is itself a red flag regulators will pursue.

17. Is there a cooling-off period before the removed auditor can be reappointed?+

The Act prescribes none for removal specifically. But reappointing an auditor just removed through an adversarial RD process would invite obvious questions; in practice, companies move on.

18. What is the government fee for ADT-2?+

The fee prescribed under the Companies (Registration Offices and Fees) Rules, 2014 for applications to the Regional Director. [NEEDS VERIFICATION: confirm the current slab on the MCA portal at filing — fee tables are revised periodically.]

19. Can shareholders remove the auditor without the board's involvement?+

No — the application power vests in the board under Section 179, and Rule 7(2)'s 30-day clock runs from the board's resolution. Shareholders act through the special resolution, but the process starts at the board.

20. We missed the 30-day ADT-2 deadline. What now?+

Pass a fresh board resolution and restart the 30-day clock — do not backdate the application. Document the corrective action in the board minutes. Backdating converts a curable delay into false information on a government application.

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