Auditors play a crucial role in maintaining transparency and accountability in a company’s financial reporting. However, when an auditor resigns, a proper procedure must be followed to ensure compliance with corporate regulations. One of the key requirements in this process is the ADT-3 form. The ADT-3 form is an essential document that auditors must file with the Registrar of Companies (ROC) to formally notify their resignation.

Understanding the ADT-3 form and its significance is crucial for both auditors and companies to avoid legal consequences. In this blog, we will discuss the purpose, filing process, and importance of the ADT-3 form, along with its compliance requirements under the Companies Act, 2013.

Visit: https://ampuesto.in/blog/what-is-the-adt-3-form

What is the ADT-3 Form?

The ADT-3 form is a statutory form prescribed under Section 140(2) of the Companies Act, 2013. It is used by auditors to formally notify the Registrar of Companies (ROC) about their resignation. The filing of the ADT-3 form ensures that the company and regulatory authorities are aware of the auditor’s resignation and allows for the appointment of a new auditor in a timely manner.

Key Details in the ADT-3 Form

  • Name and registration number of the auditor

  • Name and Corporate Identification Number (CIN) of the company

  • Date of appointment and date of resignation

  • Reason for resignation

  • Any remarks or additional information

  • Digital signature of the resigning auditor

When is the ADT-3 Form Required?

The ADT-3 form must be filed in the following situations:

1. Voluntary Resignation by an Auditor

An auditor may choose to resign due to various reasons such as professional differences, conflicts of interest, or personal reasons. In such cases, filing the ADT-3 form ensures that the resignation is formally recorded and recognized by the ROC.

2. Auditor's Disqualification

If an auditor becomes ineligible under Section 141 of the Companies Act, 2013, due to conflict of interest, non-compliance, or any other disqualifying factor, they must resign and file the ADT-3 form to comply with legal requirements.

3. Removal of Auditor by the Company

A company may decide to remove an auditor before their term ends due to dissatisfaction with their services or other valid reasons. Even in such cases, the ADT-3 form must be filed by the resigning auditor.

4. Completion of Audit Term

If an auditor completes their term and does not wish to continue, they are still required to file the ADT-3 form to notify the ROC officially.

How to File the ADT-3 Form?

Filing the ADT-3 form is a simple yet essential process that auditors must complete within 30 days of their resignation. Below is a step-by-step guide to filing the ADT-3 form:

Step 1: Draft a Resignation Letter

Before filing the ADT-3 form, the auditor must submit a resignation letter to the company’s board of directors. This letter should clearly state the reasons for resignation and the effective date.

Step 2: Obtain Board Acknowledgment

The company should acknowledge the auditor’s resignation in a board meeting and record it in the meeting minutes. A copy of this resolution should be maintained as supporting documentation.

Step 3: Log in to the MCA Portal

The auditor must log in to the Ministry of Corporate Affairs (MCA) portal using their credentials.

Step 4: Fill Out the ADT-3 Form

The auditor must enter the required details, including company information, date of resignation, and reason for resignation.

Step 5: Attach Necessary Documents

Supporting documents such as the resignation letter and board resolution must be attached to the ADT-3 form.

Step 6: Digitally Sign and Submit

The ADT-3 form must be digitally signed using a Digital Signature Certificate (DSC) and then submitted on the MCA portal.

Step 7: Pay the Applicable Fee

A nominal filing fee must be paid depending on the company’s authorized share capital.

Step 8: Receive Acknowledgment

Upon successful submission, the auditor will receive an acknowledgment from the ROC confirming that the ADT-3 form has been filed.

Why is the ADT-3 Form Important for Auditors?

The ADT-3 form is crucial for auditors due to the following reasons:

1. Ensures Legal Compliance

Filing the ADT-3 form ensures that the resignation of an auditor is legally documented, preventing any potential legal disputes.

2. Maintains Transparency

By submitting the ADT-3 form, auditors uphold transparency in corporate governance, ensuring that stakeholders are informed about changes in audit responsibilities.

3. Avoids Penalties

Failure to file the ADT-3 form within 30 days can lead to penalties imposed by the Registrar of Companies (ROC). Compliance with the deadline prevents unnecessary financial and legal consequences.

4. Strengthens Professional Reputation

Auditors who comply with legal requirements, including filing the ADT-3 form, demonstrate professionalism and integrity, which can positively impact their reputation in the industry.

5. Facilitates a Smooth Transition

The timely filing of the ADT-3 form allows companies to appoint a new auditor without delays, ensuring continuous financial oversight.

Consequences of Not Filing the ADT-3 Form

Auditors who fail to file the ADT-3 form within the stipulated time may face the following consequences:

  • Legal Action: Non-compliance may result in legal action against the auditor.

  • Penalties and Fines: The ROC may impose fines for failing to file the form on time.

  • Professional Risks: Auditors may face disciplinary action from regulatory bodies, affecting their ability to take on future assignments.

Conclusion

The ADT-3 form is a critical compliance document that auditors must file when resigning from a company. It ensures legal compliance, maintains corporate transparency, and helps auditors avoid penalties. By understanding the significance of the ADT-3 form and following the correct filing process, auditors can fulfill their professional responsibilities effectively.

If you are an auditor planning to resign, ensure you complete and submit the ADT-3 form within the required timeframe to stay compliant and protect your professional standing.

Source: https://diigo.com/0z9dee