The Ministry has taken a big step by notifying 183 major sections of Companies Act, 2013 w.e.f. 01.04.2014 out of which the provisions relating to Audit & Auditors is of utmost importance for all the Chartered professionals out there. This article contains the provision relating to Removal of Auditors.

Section- 140 of Companies Act talks about Removal of Auditor: This section corresponds to Section 225 of the old Companies Act. The Section seeks to provide for the provisions for removal of auditor before the expiry of his term.

The Board of Directors of the company has no power to remove an auditor (Individual or Firm) appointed by the company in General meeting before the expiry of his term.

Removal by Special Resolution and previous approval of the Central Government: [Sec 140(1)]:
Sub-Section (1) provides that the removal of an Auditor before the expiry of his term requires:

• The previous approval of Central Government (CG) is required.  Application will be filed with CG and prescribed fees need to be paid,
• The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a Special Resolution of the company,
• Before taking any action, the auditor concerned shall be given a reasonable opportunity of being heard.
• The application to Government shall be filed within 30 days from the date of resolution of the Board along with fees;
• The company need to hold General Meeting (EGM) within 60 (Sixty) days of the approval of Central government.