Every company must appoint an individual or a firm as auditor to their company in their first annual general meeting and as per the rule, the auditor who is appointed must hold office till the conclusion of its sixth annual general meeting. The company can remove the auditor of their company who is appointed by them before the expiry of the term.
Removal of Auditor [section 140 (1)]:
The removal of the auditor can be made only by following terms,
- By filing the application in form ADT-2 within 30 days of the resolution passed by the board to get prior approval of the Central Government.
- After receiving the approval from the Central government, the company shall hold the general meeting within sixty days of the approval.
- The Auditor must be given an opportunity to be heard by the company.
Resignation of Auditor [section 140 (2) and 140 (3)]:
The Resignation of the Auditor of the firm must be made in the following terms,
- Form ADT-3 must be filed by the auditor resigning by indicating the reasons.
- The auditor must file such statement of resignation to the company and Registrar within 30 days from the date of Resignation
- If the company is a government company the auditor must file the situation to the company and the Registrar and also to the Comptroller and Audit General of India (CAG).
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