REMOVAL OF AUDITOR BEFORE THEIR TERM:-
Provisions Under Companies Act, 2013–
Pursuant to the Provision of Section 140(1) of the Companies Act, 2013 read with Rule 7(1) of Companies (Audit and Auditors) Rules, 2014
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 (Power Delegated to Regional Director)
Mandatory Requirements-
1. Approval of Central Government is required for removal of auditor.
2. The concerned auditor shall be given an opportunity of being heard.
3. Company has to take Shareholder’s approval within 60 days of receipt of approval of Regional Director.
Provisions under SEBI (LODR), 2015
Regulation 30- Disclosure of Events or Information
The Company shall make disclosures of any events or information which are material in the opinion of the Board of Director or Deemed material mentioned under Para A of Part A of Schedule III.
The company is required to make disclosure to the Stock Exchange within 24 hrs from the occurrence of the event or Information.
*Para A of Part A of Schedule III provides that Change in Auditor is a Deemed Material Event.
Procedure for Removal of Auditor-
1. Convene a meeting of Audit Committee
The proposal to remove the auditor shall be approved by the Audit committee in a duly convened meeting of Committee.
2. Convene a meeting of Board of Directors
Fix the date of Board Meeting for removal of auditor
1. Issue Notice of Board Meeting to all the Directors of Company at least 7 days before the date of Board Meeting.
2. Intimate the concerned auditor about the date of Board Meeting at which resolution for his removal shall be passed in order to give him an opportunity of being heard.
3. Hold a meeting of Board of Directors and pass the following Board Resolution
- to consider the removal of the auditor before expiry of his tenure.
3. The Company shall submit the disclosure to the Stock Exchange about the decision to file application for removal of Auditor within 24 hours from the date of the Board Meeting and post the same on the website of the Company within 2 working days. (Regulation 30 & 46 of SEBI (LODR), 2015)
4. File an Application to the Central Government (Power Delegated to RD)
Company shall file an application to the Regional Director for removal of Auditor within 30 days of the resolution passed in the Board Meeting in Form ADT-2 along with the details of the grounds for seeking removal of auditor.( Rule 7 of the Companies (Audit and Auditor) Rules, 2014.
5. Intimation to the Stock Exchange about the Order [Regulation 30 and 46(3) of SEBI (LODR) Regulations, 2015
The Company shall submit the disclosure about the order of RD to the Stock Exchange within 24 hours from the date of hearing and post the same on the website of the company within 2 working days.(Regulation 30(4) read with Schedule III of the SEBI ( LODR), 2015)
6. File Certified Copy of Order with ROC
Company shall file certified copy of order with ROC in Form INC-28 within 30 days from the date of issue of certified copy of order.
7. Convene a Meeting of Board of Directors
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting.
- Hold a meeting of Board of Directors of the Company and pass the necessary Board Resolution
1. to take note of the order of Regional Director.
2. to fix day, date, time and venue for holding General Meeting of the Company.
3. to approve the draft notice of General Meeting along with explanatory statement annexed to the notice as per requirement of the Section 102of the Companies Act, 2013.
8. Convene General Meeting
- Notice of General Meeting shall be given at least clear 21 days before the actual date of a General Meeting to all the Directors, Members, Auditors of Company, Secretarial Auditor, and to others who are entitled to receive the notice of the General Meeting.
- Hold the General Meeting within 60 days from the date of receipt of approval of Central Government and pass Special Resolution for removal of auditor before expiry of his tenure.
- The Company shall submit to the stock exchange the details of the voting results within 2 working days from the conclusion of the meeting and post the same on the website of the Company.(Regulation 44(3) of the SEBI(LODR) Regulations, 2015)
9. File Form MGT-14 with ROC
File Form MGT-14 with the ROC within 30 days of passing Special Resolution in General Meeting.
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DISCLAIMER: The Article Is Based On The Relevant Provisions And As Per The Information Existing At The Time Of The Preparation. In No Event I Shall Be Liable For Any Direct And Indirect Result From This Article. This Is Only A Knowledge Sharing Initiative.
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