Rules 7 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.
Rule 7 fixes the procedure for removing an auditor before the end of the term: an application to the Central Government in Form ADT-2 within thirty days of the Board's resolution, and a general meeting within sixty days of receiving approval. Rule 8 requires a resigning auditor to file a statement in Form ADT-3. Rule 9, on the liability of audit firm partners, is omitted. This article follows the rules as amended up to G.S.R. 359(E) dated 30 May 2025 (in force 14 July 2025) per the MCA e-book. Later amendments should be checked.
To remove an auditor before the expiry of his term, the company applies to the Central Government in Form ADT-2, with the fee provided in the Registration Offices and Fees Rules, within thirty days of the Board's resolution (rule 7(1) and (2)); after approval it must hold the general meeting for the special resolution within sixty days of receiving it (rule 7(3)). A resigning auditor files a statement in Form ADT-3 (rule 8). Rule 9 is omitted.
Rule 7: removal before the end of the term
Section 140(1) of the Companies Act, 2013 allows an auditor appointed under section 139 to be removed before the expiry of his term only by a special resolution of the company, after the previous approval of the Central Government in the prescribed manner, and after the auditor has had a reasonable opportunity of being heard. Rule 7 is the "prescribed manner":
| Sub-rule | What it says |
|---|---|
| 7(1) | The application to the Central Government for removal of the auditor is made in Form ADT-2 and accompanied by the fees provided under the Companies (Registration Offices and Fees) Rules, 2014 |
| 7(2) | The application is made to the Central Government within thirty days of the resolution passed by the Board |
| 7(3) | The company holds the general meeting within sixty days of receipt of the approval of the Central Government for passing the special resolution |
The order of events therefore runs: the Board resolves; within thirty days the company applies in ADT-2; on receiving the Central Government's approval, the company calls a general meeting within sixty days to pass the special resolution. Form ADT-2 was substituted by the Amendment Rules of 2018. The rule prints no fee amount; see filing fees by nominal capital and additional fees for delay. The step-by-step form guide is How to File Form ADT-2: Auditor Removal Application, and the Act's side is explained in Section 140: Auditor Removal. For the later appointment of a successor, see Rules 1 to 5.
What the rule does not say
Rule 7 does not describe the auditor's right to be heard, which comes from the proviso to section 140(1), and it does not set a time for the Central Government's decision. A company should plan the sixty-day meeting window from the date the approval is received, not from the date of the Board resolution.
Rule 8: resignation in ADT-3
For section 140(2), when an auditor has resigned from the company, he files a statement in Form ADT-3. Section 140(2) requires the statement to be filed within thirty days from the date of resignation with the company and the Registrar (and, for the companies referred to in section 139(5), with the Comptroller and Auditor-General of India), indicating the reasons and other facts relevant to the resignation. The rule is a single sentence; the period and the persons to be served come from the section, and the consequence of non-compliance is in section 140 and the Act's later provisions on penalties. A company should check the Act for the current wording.
The form guide is How to File Form ADT-3: Auditor Resignation, and a discussion of the process and restrictions is in Resignation of Auditor: Process, ADT-3 Filing and Restrictions. Our compliance documentation service can assemble the papers for a company that receives a resignation.
Rule 9: omitted
Rule 9 (liability to devolve on concerned partners only) was omitted by the Second Amendment Rules of 7 May 2018, so these rules now say nothing on the liability of an audit firm's partners. The consequences for auditors under the Act are in Section 147: Penalty for Auditors.
Comparison of removal and resignation
| Feature | Removal (rule 7) | Resignation (rule 8) |
|---|---|---|
| Who starts it | The company, by Board resolution | The auditor |
| Form | ADT-2, with fees | ADT-3 |
| Authority | Central Government approval, then a special resolution | Statement filed; no approval step in the rule |
| Periods in the rule | Thirty days (application); sixty days (meeting) | None in the rule; section 140(2) fixes thirty days |
| Act | Section 140(1) | Section 140(2) |
A worked example
Orbit Retail Limited (invented) wants to remove its auditor mid-term. The Board passes a resolution on 10 July. The company files Form ADT-2 with the fees within thirty days of that resolution, and the Central Government's approval is received later. The general meeting to pass the special resolution is then held within sixty days of receiving the approval. Separately, another auditor resigns from a different client, Orbit Components Limited; he files a statement in Form ADT-3 giving his reasons, within the period the Act sets, with the company and the Registrar.
Practical points
- Keep the Board resolution date on the file: the thirty days run from it.
- Record the date the Central Government's approval is received: the sixty days run from it.
- Give the auditor a fair hearing before action, as the section requires.
- On a resignation, ask for the ADT-3 copy and match its reasons with the Board's records.
Need help with auditor changes?
A removal needs the Board resolution, the ADT-2 application and the general meeting notice in the right order, and a resignation needs a prompt response from the company. We can prepare the resolutions, the application and the successor's appointment papers through our compliance documentation service.
Key takeaways
- Removal: Board resolution, ADT-2 within thirty days, Central Government approval, general meeting within sixty days of receiving it.
- ADT-2 is accompanied by fees under the Registration Offices and Fees Rules.
- Resignation: statement in Form ADT-3; the time limit is in section 140(2).
- Rule 9 on partners' liability is omitted.
- Consult the Act for the auditor's right to be heard and for penalties.
Read next
- Section 140: Auditor Removal
- How to File Form ADT-3: Auditor Resignation
- Rules 1 to 5: auditor appointment and ADT-1
- Rules 10 and 10A: auditor disqualifications
Disclaimer: Based on the Companies Act, 2013 rules (and the Companies (Auditor's Report) Order, 2020) named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.