The ADT-3 form is an essential compliance document in corporate governance, specifically concerning the resignation of an auditor from a company. Filing ADT-3 correctly and on time is crucial to maintaining legal and regulatory transparency. In this article, we will explore what the ADT-3 form is, its purpose, and why it is mandatory.
Understanding ADT-3
The ADT-3 form is prescribed under Section 140(2) of the Companies Act, 2013, which states that if an auditor resigns from a company, they must inform the Registrar of Companies (ROC) about their resignation. This is done by submitting ADT-3 through the Ministry of Corporate Affairs (MCA) portal.
The primary purpose of ADT-3 is to ensure that stakeholders are aware of the resignation, providing transparency in corporate affairs. It also helps regulatory authorities track auditor changes to prevent fraudulent activities.
Why is ADT-3 Required?
The filing of ADT-3 is crucial for several reasons:
1. Legal Compliance
Under the Companies Act, an auditor cannot simply resign without informing the ROC. Filing ADT-3 ensures compliance with regulatory requirements.
2. Transparency & Accountability
By submitting ADT-3, auditors provide a clear explanation of their resignation, reducing ambiguity for shareholders, regulators, and other stakeholders.
3. Prevention of Corporate Fraud
Frequent changes in auditors could indicate financial mismanagement. The mandatory submission of ADT-3 allows authorities to monitor such patterns and take necessary actions.
4. Avoiding Penalties
Failure to file ADT-3 within 30 days of resignation can result in legal consequences, including penalties and compliance issues for both the auditor and the company.
When Should ADT-3 be Filed?
The ADT-3 form must be submitted within 30 days from the date of the auditor's resignation. Delays in filing can attract penalties and create unnecessary legal complications.
How to File ADT-3?
Step 1: Prepare the Required Details
Before filing ADT-3, ensure you have:
- Auditor’s resignation letter
- Reasons for resignation
- Relevant dates (appointment and resignation)
- Digital Signature Certificate (DSC)
Step 2: Visit the MCA Portal
Go to the MCA website, log in to your account, and navigate to the ADT-3 e-Form section.
Step 3: Fill Out the Form
Enter the company and auditor details, along with the reason for resignation. Attach supporting documents, such as the resignation letter.
Step 4: Submit and Pay Fees
Once all details are verified, submit ADT-3 along with the prescribed fee. After submission, an acknowledgment is generated for future reference.
Consequences of Non-Filing of ADT-3
Failure to file ADT-3 can lead to:
- Legal penalties for the auditor
- Non-compliance issues for the company
- Potential scrutiny from regulatory bodies
Conclusion
Filing ADT-3 is a critical step when an auditor resigns from a company. It ensures legal compliance, corporate transparency, and prevents financial mismanagement. Companies and auditors must adhere to this requirement to avoid penalties and legal repercussions.
By understanding the importance of ADT-3, businesses can maintain trust and regulatory compliance in their financial operations.
Source: https://www.dailygram.com/blog/1324386/what-is-adt-3-and-why-is-it-required/
