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CA Intermediate · Corporate and Other Laws · Audit and Auditors

Kavya & Associates, chartered accountants, were auditors of Orion Components Ltd. Mid-term, the firm resigned, and filed the required statement with the company and the Registrar. Which statement correctly describes the legal requirement on resignation of an auditor under the Companies Act, 2013?

An auditor who resigns must file a statement in Form ADT-3 with the company and the Registrar within 30 days of resignation, giving reasons and relevant facts. It is not limited to listed companies, needs no government approval, and cannot be satisfied by oral intimation.

  1. AThe auditor must file a statement in Form ADT-3 with the company and the Registrar within 30 days of resignation, indicating the reasons and other factsCorrect
  2. BThe auditor need only inform the Board orally and no filing is required
  3. CThe auditor must obtain prior approval of the Central Government before resigning
  4. DThe auditor must file Form ADT-3 with the Registrar only if the company is listed

Explanation

Section 140(2) requires an auditor who resigns to file within 30 days from the date of resignation a statement in Form ADT-3 with the company and the Registrar, indicating the reasons and other relevant facts. For government companies, the statement goes to the CAG as well. No prior government approval is required, and the rule is not limited to listed companies. Oral intimation is insufficient, so the first option is correct.

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