Auditor Removal explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The shareholders appoint the auditor. They cannot dismiss one on their own.
The requirement
As per Section 140 (1) of the CA, 2013 and Rule 7 of Companies (Audit and Auditors) Rules, 2014, a company may remove its auditor before the expiry of the term by obtaining prior approval of the Central Government and passing a special resolution in general meeting.
An auditor's value depends entirely on being able to say something the management does not want said. Every protection in the Act around tenure exists to make that possible.
If a simple majority could remove the auditor, the protection would be illusory. A management facing a qualification, an adverse internal financial controls opinion, or a fraud report under section 143(12) could put a resolution to a general meeting it effectively controls, and the auditor would be gone before the report was signed.
Section 140(1) therefore imposes two locks. The special resolution raises the internal threshold to three-quarters, so a bare majority is not enough. And the prior approval of the Central Government puts the decision partly outside the company altogether — the removal cannot proceed unless an authority with no stake in the accounts is satisfied there is a proper reason.
The word prior matters. The approval must be obtained before the resolution is passed, not afterwards to validate a decision already taken. A company that removes first and applies later has not followed the section.
Note what the section does not cover. It applies to removal before the expiry of the term. Simply not reappointing an auditor at the end of a term, or a rotation-driven change under section 139(2), is not removal and needs none of this. Nor does a vacancy arising from disqualification under section 141(4), where the auditor is out by operation of law.
The auditor's side of the relationship has its own machinery. Resignation under section 140(2) requires a statement filed with the company and the Registrar — so an auditor pressured to leave quietly must still put the reasons on a public record.
Four ways an auditor's office ends
| Route | What is required |
|---|---|
| Auditor removal before expiry of term | Central Government approval plus a special resolution |
| Expiry of term / rotation under section 139(2) | Nothing beyond the ordinary appointment of a successor |
| Disqualification under section 141(3) | Vacates automatically; casual vacancy filled by the Board in 30 days |
| Resignation under section 140(2) | Statement filed with the company and the Registrar |
The procedure
- Board resolution proposing the removal, recording the reasons.
- Application to the Central Government in the prescribed form within the prescribed period.
- Receipt of the prior approval.
- General meeting, at which the special resolution is passed.
- The auditor must be given a reasonable opportunity of being heard before removal takes effect.
Note on currency
The prescribed form and the authority exercising the Central Government's power under section 140(1) have changed since this FAQ was issued, and the National Financial Reporting Authority now has powers over auditors of prescribed classes of companies. Verify the current rule 7, the applicable form and the correct authority before making an application.
Common mistakes
- Passing the resolution first and applying for approval afterwards.
- Using an ordinary resolution for an auditor removal.
- Treating non-reappointment at the end of a term as removal.
- Removing without giving the auditor a reasonable opportunity of being heard.