Removal of Auditor Before Expiry of Term
A company can remove its statutory auditor mid-term only with the Central Government’s prior approval and a special resolution, under Section 140(1) of the Companies Act, 2013. Form ADT-2 is due within 30 days of the board resolution. We draft the papers, file on the MCA V3 portal and prepare the company’s reply for the hearing.
What it is
Your statutory auditor is appointed for a fixed term, usually five years from one AGM to the sixth. The removal of auditor mid-term is hard by design, so that auditors can report without fear of being dropped.
Section 140(1) therefore needs two things: the previous approval of the Central Government, and a special resolution of shareholders. The approval power now sits with the Regional Director. Rule 7 of the Companies (Audit and Auditors) Rules, 2014 sets the timelines, and the application is Form ADT-2. The auditor must also get a reasonable opportunity of being heard.
Who it applies to
You have a real reason to change mid-term
Persistent audit delays, a breakdown in working relations, or a group that wants one audit firm. The reason must hold up at a hearing.
Your auditor has become ineligible
An auditor who becomes disqualified under Section 141 after appointment vacates office, and the vacancy is treated as a casual vacancy. That is a different route from removal.
The term is ending anyway
If you simply do not want to reappoint the auditor at the AGM, you need a special notice under Section 140(4), not Central Government approval. See auditor appointment and ADT-1.
Why it matters
Removal of auditor without approval is invalid
Without the Regional Director’s prior approval, the resolution does not remove the auditor, and the new appointment is open to challenge.
Your accounts depend on it
Financial statements signed by an auditor whose appointment is in doubt invite questions from lenders and regulators.
Penalties under Section 147
Contravening Sections 139 to 146 exposes the company to a penalty of ₹25,000 to ₹5 lakh, and each officer in default to ₹10,000 to ₹1 lakh.
Documents required
For the ADT-2 application
- Certified copy of the board resolution
- Detailed reasons for removal, with supporting correspondence
- Copy of the auditor’s appointment and ADT-1 filed for it
For the hearing
- Notice given to the auditor and proof of delivery
- The auditor’s reply or representation, if any
- Authorisation for the company’s representative
After approval
- Regional Director’s order
- Notice and explanatory statement for the general meeting
- Consent and Section 141 eligibility certificate of the new auditor
Removal, non-reappointment or resignation
| Removal mid-term | Not reappointing at the AGM | Auditor resigns | |
|---|---|---|---|
| Law | Section 140(1) | Section 140(4) | Section 140(2) |
| Who starts it | Board, then shareholders | Shareholders, by special notice | The auditor |
| Government approval | Yes, ADT-2 to the Regional Director | No | No |
| Resolution | Special resolution | Ordinary resolution appointing someone else | Board fills the casual vacancy |
| Forms | ADT-2, MGT-14, ADT-1 | ADT-1 | ADT-3 by the auditor, ADT-1 by the company |
Here is the catch: most companies that want a change can simply wait for the term to end. Take a Faridabad manufacturer whose audit for FY 2025-26 is running months late, with a bank renewal waiting on signed accounts. There, removal under Section 140(1) is the route. If it is the auditor who wants to leave, the process is an auditor resignation in Form ADT-3 instead.
How it works
Test the grounds first
We review the engagement, the correspondence and the reasons, and tell you whether removal or non-reappointment fits better. In practice, a well-documented trail of reminders and missed dates carries more weight than a general complaint.
Get the board to approve the move
The board resolves to seek removal and authorises a director to apply. The 30-day ADT-2 clock starts here.
File ADT-2 with the Regional Director
We file ADT-2 on the MCA V3 portal within 30 days, with the reasons and documents, and pay the application fee.
Prepare the company’s reply for the hearing
The auditor gets a chance to be heard. We prepare the company’s reply for your authorised person.
Pass the special resolution and file the forms
Within 60 days of the approval, shareholders pass the special resolution and appoint the new auditor. We file MGT-14 within 30 days and ADT-1 for the new auditor within 15 days.
Timelines
File ADT-2 within 30 days
The application must reach the Central Government within 30 days of the board resolution (Rule 7(2)).
Hold the general meeting within 60 days
Shareholders must meet to pass the special resolution within 60 days of receiving the approval (Rule 7(3)).
File MGT-14 and ADT-1 after the meeting
MGT-14 within 30 days of the special resolution; ADT-1 for the new auditor within 15 days of the meeting.
What happens if you get it wrong
The removal does not stand
Skip the approval or the special resolution and the old auditor remains the auditor in law.
Section 147 penalty
₹25,000 to ₹5 lakh for the company and ₹10,000 to ₹1 lakh for every officer in default.
Late-filing fees
A late MGT-14 or ADT-1 costs 2× to 12× the normal fee, depending on the delay.
Frequently asked questions
Can a company remove its auditor before the term ends?
Yes, but only with the Central Government’s previous approval and a special resolution of shareholders, under Section 140(1). The application is Form ADT-2, filed with the Regional Director within 30 days of the board resolution. The auditor must get a reasonable opportunity of being heard. With clear reasons and documents in order, the process is straightforward to follow.
What is Form ADT-2?
ADT-2 is the application to the Central Government for removing an auditor before the end of the term. Rule 7 of the Companies (Audit and Auditors) Rules, 2014 requires it within 30 days of the board resolution, with the fee under the Companies (Registration Offices and Fees) Rules, 2014. MCA revised the ADT forms from 14 July 2025. We file it on the MCA V3 portal for you.
Who approves the removal of an auditor?
The Regional Director, exercising the Central Government’s power under Section 140(1). Since 16 February 2026, companies in Haryana deal with the Regional Director at Chandigarh, and Delhi companies with the Regional Director at New Delhi. After approval, shareholders still have to pass a special resolution within 60 days. We track the application through to the order.
Is government approval needed if we just don’t reappoint the auditor?
No. Choosing a new auditor at the AGM when the current term ends is not removal. Section 140(4) needs a special notice for a resolution to appoint someone other than the retiring auditor; it is not needed where the retiring auditor has completed the full term. The retiring auditor may send a written representation, which is circulated to members. ADT-1 follows for the new auditor.
What reasons does the Regional Director accept?
The law lists no fixed reasons, so each case turns on its facts. Section 140(1) requires a reasonable opportunity of being heard for the auditor, so the company should show a genuine reason such as persistent delay or loss of confidence, with documents. A removal that looks like retaliation for audit findings is unlikely to succeed. We help you document the reasons clearly and fairly.
How long does the whole removal process take?
It depends mainly on the Regional Director’s hearing and order. The fixed steps are ADT-2 within 30 days of the board resolution and the general meeting within 60 days of approval. After the meeting, MGT-14 is due within 30 days and ADT-1 within 15 days. If timing matters, say a group company in Gurugram needs one audit firm before year-end, start early and we will plan backwards from your date.
Can the Tribunal remove an auditor?
Yes. Under Section 140(5), the NCLT can order a company to change its auditor if it is satisfied that the auditor acted fraudulently or abetted fraud. The Tribunal acts on its own or on an application by the Central Government or any person concerned. An auditor removed this way cannot be appointed by any company for five years. Ordinary disagreements go through Section 140(1) instead.
What is the penalty for removing an auditor without following the process?
Under Section 147(1), contravention of Sections 139 to 146 makes the company liable to a penalty of ₹25,000 to ₹5 lakh and every officer in default ₹10,000 to ₹1 lakh. The removal also has no legal effect, so the old auditor remains in office. Following the ADT-2 route from the start avoids both problems.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Applications to the Central Government carry a fee based on authorised capital:
| Authorised capital | Application fee |
|---|---|
| Up to ₹25 lakh | ₹2,000 (OPC and small company ₹1,000) |
| Above ₹25 lakh to ₹50 lakh | ₹5,000 (OPC and small company ₹2,500) |
| Above ₹50 lakh to ₹5 crore | ₹10,000 |
| Above ₹5 crore to ₹10 crore | ₹15,000 |
| Above ₹10 crore | ₹20,000 |
MGT-14 and ADT-1 each carry a normal fee of ₹200 to ₹600 depending on authorised capital.
Ready to begin?
Tell us why the auditor needs to change, and we will tell you which route fits and file ADT-2 within the 30 days.