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When a statutory auditor resigns, two obligations come into existence at the same moment and they belong to different people. The auditor must tell the Registrar why, on Form ADT-3, within 30 days. The company must fill the vacancy that the resignation has created, within its own timeline, and report the new appointment separately.
Auditors miss ADT-3 more often than companies miss ADT-1, for an understandable reason: an auditor who has resigned has usually stopped thinking about that client. The filing obligation, and the penalty attached to it, does not stop with the engagement. Section 140(3) directs that penalty at the auditor personally.
N D Savla & Associates advises on both sides of an auditor resignation. For resigning auditors, we draft the statement of reasons and file ADT-3 within the window. For companies, we handle the casual vacancy under Section 139(8) and the for the incoming auditor, and where required we take on the statutory audit itself.
What Is Form ADT-3?
Form ADT-3 is the statement an auditor files with the Registrar of Companies on resigning from office. It is filed under Section 140(2) of the Companies Act, 2013 read with Rule 8 of the Companies (Audit and Auditors) Rules, 2014, within 30 days of the date of resignation.
Section 140(2) requires the auditor who has resigned to file a statement in the prescribed form indicating the reasons and other facts as may be relevant with regard to the resignation. For a government company or a company in which the Central or a State Government holds a controlling interest, the statement must also be filed with the Comptroller and Auditor General of India.
The purpose is disclosure rather than approval. Nobody grants permission for an auditor to resign. What the provision creates is a public record of the fact and the stated reason, available to the incoming auditor, to shareholders, to lenders and to regulators. That record is the point.
ADT-3 sits within a small family of auditor forms, and confusing them is the most common source of error:
| Form | Filed by | Purpose | Deadline |
|---|
| ADT-1 | The company | Notice of appointment of auditor under Section 139 | 15 days from appointment |
| ADT-2 | The company | Application to Central Government for removal of auditor before term expiry under Section 140(1) | 30 days from board resolution |
| ADT-3 | The auditor | Statement of resignation and reasons under Section 140(2) | 30 days from resignation |
| ADT-4 | The auditor | Report of suspected fraud to the Central Government under Section 143(12) | As prescribed under Rule 13 |
Resignation and removal are entirely different processes. An auditor who chooses to leave resigns and files ADT-3. A company that wishes to remove an auditor before the end of the term must obtain Central Government approval on ADT-2 and then pass a special resolution — a deliberately difficult route, designed to protect auditor independence.
When Does an Auditor Resign, and What Triggers the Filing?
A resignation takes effect when the auditor communicates it to the company, and the 30-day period runs from that date. The circumstances vary considerably, and the statement of reasons should reflect the actual circumstance rather than a formula.
Resignation on professional grounds
An auditor may resign because of an inability to obtain sufficient appropriate audit evidence, a disagreement with management on accounting treatment, a restriction on the scope of work, or a concern about the integrity of management representations. These are the resignations the provision was principally designed to surface. The statement should be specific, because the incoming auditor will read it and because and regulatory scrutiny may later examine the file.
Resignation on independence grounds
A disqualification under Section 141 may arise after appointment — a relative joins the company as a key managerial person, a business relationship develops, the indebtedness threshold is crossed, or the firm takes on a prohibited non-audit service under Section 144. Where independence is compromised, resignation is the correct response, and the statement should say so plainly rather than obscuring the reason.
Resignation on capacity or commercial grounds
The ceiling of twenty company audits per partner under Section 141(3)(g), the loss of a signing partner, or a fee dispute may make continuing impracticable. These are legitimate reasons and the statement should record them honestly. What is unhelpful is a bare recital of preoccupation, which tells the reader nothing and looks evasive where the resignation is mid-term.
Resignation ahead of a rotation deadline
Where an auditor is approaching the end of the permitted term under Section 139(2), the correct route is usually to complete the term and not be reappointed rather than to resign. A resignation shortly before a rotation deadline invites the question of why, and well in advance avoids the situation entirely.
How Has Auditor Resignation Reporting Developed in India?
For most of the history of Indian company law, an auditor could simply leave. Nothing was filed, nothing was disclosed, and the reason remained a private matter between the auditor and the board. The current regime is a response to what that silence concealed.
Under the Companies Act, 1956, Section 224 governed appointment and Section 225 the removal of an auditor, but there was no equivalent of ADT-3. An auditor who resigned mid-term created a casual vacancy that the board filled, and the register recorded the outcome without the reason. In a period when the Indian corporate sector was smaller and audit was regarded largely as a compliance function, the absence of disclosure attracted little attention.
Liberalisation changed the exposure. Through the 1990s and 2000s the corporate sector grew rapidly, public shareholding widened, foreign institutional investment increased, and the consequences of an audit failure spread across a much larger group of stakeholders. The signal value of an auditor walking away from an engagement rose accordingly — but the signal remained invisible, because nothing had to be disclosed.
The Satyam Computer Services fraud, uncovered in January 2009, made that invisibility untenable. The subsequent reform agenda focused specifically on auditor accountability and independence, and the Companies Act, 2013 implemented it through a connected set of provisions: mandatory rotation under Section 139(2), stricter disqualifications under Section 141, a list of prohibited non-audit services under Section 144, a duty to report suspected fraud to the Central Government under Section 143(12), and — the disclosure limb — the resignation statement under Section 140(2).
Institutional oversight followed. The National Financial Reporting Authority was constituted in 2018 with jurisdiction over auditors of larger companies. A wave of auditor resignations from Indian listed companies during 2018 and 2019 brought the adequacy of resignation disclosures into sharp focus, and the securities regulator responded in October 2019 with detailed requirements for listed entities, obliging auditors to give specific reasons and requiring the company to disclose them to the exchanges. The direction was consistent: a resignation should not be capable of being disguised as routine.
The most recent change came through the Companies (Audit and Auditors) Amendment Rules, 2025, notified by G.S.R. 359(E) dated 30 May 2025 and effective from 14 July 2025. Alongside making ADT-1 mandatory for first auditors, the amendment revised Form ADT-3 and converted ADT-4 from a prescribed format into a proper electronic form. The auditor forms also moved to the web-based MCA21 V3 platform on the same date, replacing the earlier practice of completing a PDF offline and uploading it.
The trajectory matters for anyone drafting a statement of reasons today. Regulators have moved steadily against uninformative disclosure, and a statement that says nothing is now more likely to attract attention than one that says something difficult.
How Do You File ADT-3 — Step by Step?
- Fix the date of resignation and diarise the deadline. The 30-day period runs from the date of the resignation letter. Send the letter formally to the company, addressed to the board, with an acknowledgement of receipt. That acknowledgement establishes the date if the timing is ever questioned.
- Draft the statement of reasons before filing, not while filing. This is the substance of the form and deserves considered drafting. State the reason accurately and the relevant facts. Where the resignation follows a disagreement or an inability to obtain evidence, describe it factually and without characterisation of individuals. Where the matter is sensitive, take a second professional view on the wording before it becomes a public record.
- Consider whether a fraud report is separately required. Section 143(12) obliges an auditor who has reason to believe an offence involving fraud is being or has been committed to report it to the Central Government or to the audit committee, depending on the amount involved and following the procedure in Rule 13. Resignation does not discharge that duty, and where both are engaged, the fraud report and the should be handled in parallel rather than sequentially.
- Assemble the working papers before you leave. Documentation supporting the reasons stated in ADT-3 should be complete and retained. An auditor whose resignation is later examined — by the incoming auditor, by a regulator, or in a dispute — is protected by contemporaneous records and exposed without them.
- File Form ADT-3 within 30 days. The form is filed by the auditor on the MCA portal at using the auditor’s own digital signature, with the resignation letter attached and the statement of reasons completed. Record the SRN.
- File with the Comptroller and Auditor General where applicable. For a government company, or a company in which the Central Government or a State Government holds a controlling interest, Section 140(2) requires the statement to be filed with the CAG in addition to the Registrar. This is a separate step and is regularly overlooked.
- Support the company on the casual vacancy. The resignation creates a casual vacancy under Section 139(8). The board must fill it within 30 days, and because the vacancy arose from resignation, members must approve the appointment in general meeting within three months of the board’s recommendation. The company then files for the incoming auditor within 15 days.
- Respond properly to the incoming auditor. Professional practice requires the incoming auditor to communicate with the outgoing auditor before accepting the appointment. Respond substantively. Where the resignation was for professional reasons, the incoming auditor needs to know, and a non-committal reply serves nobody — least of all the outgoing auditor, if the matter later becomes contentious.
Filing ADT-3 is the auditor’s obligation and the penalty under Section 140(3) attaches to the auditor personally, not to the company. An auditor who resigns from several engagements in the same period should treat each as a separate 30-day clock. There is no consolidated filing.
How Does Auditor Resignation Play Out Across Sectors?
Listed companies and their subsidiaries
Disclosure obligations extend well beyond ADT-3. A resignation from a listed entity requires prompt disclosure to the stock exchanges with the specific reasons, and the market reads mid-term auditor resignations as a signal. Where a listed parent’s subsidiary loses its auditor, the group auditor must consider the implications for the consolidated audit.
NBFCs and financial services entities
Sector regulators impose their own auditor eligibility and tenure conditions, and a resignation may be triggered by a change in those conditions rather than by anything to do with the company. Where the resignation is regulator-driven, the statement of reasons should say so, since a bare resignation from a regulated entity invites a reading that is not warranted.
Startups and growth-stage companies
Auditor changes are frequent as companies outgrow their first auditor or as investors require a larger firm. Most of these are routine, but they still require correct handling — and a gap between one auditor leaving and the next being appointed is a diligence finding. Managing the transition through keeps the record continuous.
Family businesses and long-standing engagements
Where an auditor has served a company for many years, resignation is often prompted by the rotation requirement or by the auditor’s own retirement. These are the least contentious resignations and the most likely to be handled informally — which is precisely why the ADT-3 filing gets missed. A retiring auditor closing a practice should complete the resignation filings for every client before winding down.
Why Choose N D Savla & Associates for ADT-3 and Auditor Transitions?
We draft the statement of reasons carefully
This is a public document that may be read years later by a regulator, an incoming auditor or a court. We help resigning auditors state the position accurately and defensibly, which is a materially different exercise from filling in a form field.
Both sides of the transition handled
The outgoing auditor’s ADT-3 and the company’s casual vacancy compliance are two halves of one event. We act on either side and understand the other, which means the file does not fall into a gap between two firms.
We keep the timelines from colliding
An auditor resignation sets three clocks running at once — 30 days for ADT-3, 30 days for the board to fill the vacancy, and three months for members to approve. They interact, and running them as a single sequence rather than three separate tasks is what keeps the company continuously compliant.
Current on the 2025 amendments
The auditor forms were revised and moved to the MCA V3 platform with effect from 14 July 2025, and ADT-4 became an electronic form in the same amendment. We work with the current forms and current validations rather than the process that applied last year.
Six offices across Maharashtra and Goa
Andheri, Charni Road, Vashi, Thane, New Panvel and Panaji. When a resignation requires an extraordinary general meeting inside a three-month window, being able to convene it locally is what makes the timeline work.
Frequently Asked Questions on ADT-3 Filing
Who files ADT-3 — the company or the auditor?
The auditor files it. This is the exact reverse of ADT-1, which the company files. Section 140(2) places the obligation on the auditor who has resigned, and the penalty under Section 140(3) falls on the auditor personally rather than on the company. The company has its own separate obligation — to fill the resulting casual vacancy under Section 139(8) and to file ADT-1 for the incoming auditor — but that does not discharge the outgoing auditor’s duty to file ADT-3.
What is the deadline for filing Form ADT-3?
ADT-3 must be filed within 30 days from the date of resignation, under Section 140(2) read with Rule 8 of the Companies (Audit and Auditors) Rules, 2014. The period runs from the date of the resignation letter, not from the date the company acknowledges it or the date the casual vacancy is filled. Because the deadline attaches to the auditor rather than the company, it is frequently missed by auditors who assume the company will handle the paperwork.
What is the penalty for not filing ADT-3?
Section 140(3) provides that an auditor who fails to comply with Section 140(2) is liable to a penalty of fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less, and in the case of a continuing failure a further penalty of five hundred rupees for each day, subject to a maximum of two lakh rupees. The penalty structure was recast into this form by the Companies (Amendment) Act, 2020 as part of the decriminalisation exercise.
What should the statement of reasons in ADT-3 actually say?
It should state the reasons and any other facts relevant to the resignation, honestly and specifically. A bare reference to preoccupation or personal reasons is common but weak, particularly where the resignation is mid-term or follows a disagreement. Where the auditor is resigning because of an inability to obtain information, a disagreement on accounting treatment, or a concern about management integrity, saying so is both the statutory expectation and the auditor’s protection if the matter is examined later.
What must the company do when its auditor resigns?
A resignation creates a casual vacancy under Section 139(8). The Board must fill it within 30 days, and because the vacancy arose from resignation, the appointment must also be approved by the members in general meeting within three months of the Board’s recommendation. The new auditor holds office until the conclusion of the next annual general meeting. The company then files ADT-1 for the incoming auditor within 15 days of the relevant meeting — a separate filing from the outgoing auditor’s ADT-3.
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