Auditors Resignation and Filing of ADT3 and GNL2 under Companies Act 2013

As per section 140(2) of the Companies Act, 2013, resigning auditor is required to file a statement with RoC within 30 days. The text of the subsection (2) to section 140 is as under:

“(2) The auditor who has resigned from the company shall file within a period of thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with regard to his resignation..”

Further, Rule 8 (Resignation of auditor ) of the  Companies (Audit and Auditors) Rules, 2014 states that,

“ For the purposes of sub-section (2) of section 140, when an auditor has resigned from the company, he shall file a statement in Form ADT-3”

The penalty for non compliance as provided by sub section (3) is a fine which can be  anything from fifty thousand to five lakhs.

Further, MCA vide its circular no  9/2014 dated 25-04-2014 has stated that the form ADT-3 (Notice of Resignation by Auditor) is not available as e-form  as on date and the stakeholders  will fill it physically, get it duly signed/certified by the professionals, if applicable, and attach these with the prescribed General e-Form called GNL-2. As per the circular further this arrangement was to continue till the ADT-3 is made available as e-Forms. Read full circular Click Here >>

Well, nothing seems wrong here with the above provisions or the circular, In fact the process of filing intimation of resignation in ADT-3 seems pretty simple as under:

1. Take a print out of Form ADT-3 and fill the following details physically;

(a)    Corporate identity number (CIN)

(b)   Name , registered address /principal place of business and email of the Company

(c)    Category of auditor (individual or firm)

(d)   Name, PAN, Membership No, Firm registration Number of auditor/firm

(e)    Address of the auditor/firm

(f)    Reasons for resignation

(g)   Other relevant facts relevant to the resignation

2.  Attach letter of resignation

3. Verify and Sign the form physically

4. Attach the form to General e-Form called GNL-2, and

5. Upload the form at MCA Portal

Who shall file GNL-2, Company or the Auditor?

But wait, here is the problem, the general e-form GNL-2 does not contain any space for attaching digital signature by the retiring auditor. Instead, the signature field allows only for the DSC of Director, Manager, Secretary, CEO & CFO of the concerned company. 

Infact the GNL-2 is a residual e-form which under rule of 12(2) of the Companies (Registration Offices and Fees) Rules, 2014, is required to be filed by the company.

Also the Instruction Kit for e-Form GNL-2 suggest that it is to be filed by the company.
“Company can file certain documents with the Registrar of Companies by filing this e-Form GNL-2 and in case there is no e-Form prescribed for filing any document with Registrar, then company or liquidator can file such documents through this e-Form”

Thus we can see that as on date, MCA has not established any mechanism whereby intent of the section 140(2) can be implemented. It is also to be kept in mind that there is no requirement under the Companies Act, 2013 for companies to file the resignation of the auditor with the registrar of Companies.

Therefore at present, it is on the sweet will of the company to file or not to file GNL-2 containing ADT-3 as attachment and auditor has been made totally handicapped in this regard.

How to give intimation of auditors resignation to Registrar of Companies (RoC) to avoid penalty?

Till the form ADT-3 is itself made an e-form or GNL-2 is modify to accommodate uploading by the auditor directly, the following is suggested.

1. Deliver physical ADT-3 along with letter of resignation to the company concerned
2. In the resignation letter itself, ask the company to file GNL-2 along with ADT-3
3. Deliver a letter to RoC along with Physical ADT-3 stating auditors inability to file GNL-2 with reasons.
    Follwing is a suggestive letter (to be modified as desired),

To
The Registrar of Companies
……….

Sub: Resignation from the auditor of M/s …………. (CIN ……………………..)

Dear Sir/Madam,

Please find attach herewith the following:

01     Copy of resignation dated  ………… from the above named company    
02     Proof of delivery of resignation and physical ADT-3 to the company
03     Physcial ADT-3 duly filled, verified and signed.

To the best of my knowledge and belief, I am not authorized, entitled  and capable to file the GNL-2 in this regard as the general e-form GNL-2, in its present form does not contain any field for affixing my digital signature (DSC). Infact the signature field in GNL-2 permits only for the DSC of Director, Manager, Secretary, CEO & CFO of the concerned company.

I have already delivered a duly filled, signed and verified copy of physical form ADT-3 to the company with a request to file it through GNL-2 within 30 days with your office.

Kindly, guide on how to file GNL-2, if it is still required to be filed by the auditor and not by the company.

Thanking you

Sincerely

Mr/Ms ……………….
ABC and Company
Chartered Accountants