Form ADT-3: Notice of Resignation by the Auditor

Who files and why

An auditor may resign before the end of the term for reasons such as a fee dispute, lack of access to records, a conflict of interest or pre-occupation. Section 140(2) requires the resigning auditor to file a statement in ADT-3 with the company and the Registrar within 30 days, indicating the reasons and other facts relevant to the resignation.

Unlike most company forms, ADT-3 is filed by the auditor, whether an individual or a firm, using the auditor's own MCA login and DSC. The company does not sign it. Listed entities also have SEBI disclosure obligations, which are separate. A resignation letter alone, without ADT-3, does not satisfy Section 140(2), so the auditor should treat the filing as part of the exit process.

What to disclose

The statement should be specific. Generic reasons such as pre-occupation are accepted in the form, but where the auditor has concerns about the company's records or conduct, those facts should be stated. Section 140(2) refers to reasons and other facts relevant to the resignation, and regulators and incoming auditors read these statements closely.

• Date of resignation and date of appointment
• Period for which the audit was completed
• Reasons for resignation and other relevant facts
• Details of any audit reports pending
• Copy of the resignation letter sent to the company

What the company does next

The company treats the resignation as a casual vacancy. The board appoints a new auditor within 30 days, and because the vacancy arises from resignation, members must approve the appointment within three months at a general meeting under Section 139(8). The company files ADT-1 for the new appointment.

Removal of an auditor by the company before the end of the term is a different process. It needs a special resolution and prior approval of the Central Government in Form ADT-2, after giving the auditor a reasonable opportunity of being heard.

Fees and penalty

The filing fee is calculated on the nominal share capital of the company being audited, under the standard slab of ₹200 to ₹600, with additional fee multiples for late filing.

Late filing therefore costs both the additional fee and exposure to penalty. Section 140(3) penalises an auditor who does not comply with Section 140(2). The penalty is ₹50,000 or an amount equal to the auditor's remuneration, whichever is less. If the failure continues, a further ₹500 per day applies, subject to a maximum of ₹2 lakh.

Common mistakes

Auditors sometimes inform the company but forget the MCA filing, assuming the company's ADT-1 for the new auditor is enough. Other errors include wrong dates of appointment, a resignation letter without reasons, filing through the company's login instead of the auditor's, and a DSC that is not registered on the auditor's MCA profile. Companies should follow up with the outgoing auditor so that MCA records are consistent. Refogo's partner professionals can assist companies with appointing a replacement auditor and filing ADT-1.

Step by step

1. 1Submit resignation

   Auditor sends a resignation letter with reasons to the company.

2. 2Log in to MCA

   Use the auditor's own V3 login linked to the DSC.

3. 3Fill ADT-3

   Enter the company's CIN, dates and reasons.

4. 4Attach letter

   Upload the resignation letter and any supporting statement.

5. 5Sign and pay

   Auditor signs with DSC and pays the fee within 30 days.

6. 6Company appoints successor

   Board fills the vacancy and the company files ADT-1.