ROC ADT 2
What is ADT 2?
As per section 140 of the 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 pass a 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.
Process of ADT – 2 Filing
Pass a resolution for the removal of auditors
Give a reasonable opportunity to Auditor.
- Company has to give a reasonable opportunity of being heard to Auditor. This provision was not there in 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
- Apply for Central government approval within 30 daysfrom date of passing board resolutions in Form ADT-2 as an attachment to Form RD1.
Pass a special resolution
- After getting approval, the company has to conduct a general meeting within 60 daysfrom the date of approval to pass a special resolution approving central government’s approval.
- For getting approval, the company has to file Form ADT-2 as attachment to Form RD-1 for approval of Central Government.
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, companies have to file ADT- 1 before uploading ADT- 2.
Removal Of Auditor By Tribunal Or On an Application made by Central Government
- Where the present auditor of a company has directly or indirectly acted in a fraudulent manner or abetted or colluded in any fraud by or in relation to the company or its directors or officers than the Tribunal may direct the company to change its auditors.
- In this case, the central government makes an application. Therefore, the Tribunal should also agree with the requirement of change of auditor. Thus, the tribunal should within, 15 days of receipt of the application pass an order that the auditor shall not function, and the central government may appoint another auditor in his place.
- Auditor against whom Tribunal passes an order for removal shall not be eligible for appointment in any company for 5 years. Moreover, 5 years shall initiate from the date of the final order. Further, In such cases, both the audit firm and partner concerned will be jointly and severally liable.