ADT-1 & ADT-3 in case of Demerger of CA Firms

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This discussion clarifies the process for statutory auditors when a CA firm demerges. If a partner resigns and forms a new sole proprietorship, they must first resign from the client companies by filing form ADT-3 within 30 days. This creates a casual vacancy, requiring the new proprietorship firm to file form ADT-1 to be appointed until the next Annual General Meeting (AGM). Subsequently, at the AGM, the company can appoint the auditor for a full five-year term if they wish.

Pawan Kumar

Pawan Kumar (Querist)
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06 January 2021 Dear Experts,

I was partner in a CA firm and on my behalf firm was statutory auditor of some companies. But in Dec,2020 I have resigned from partnership firm and have created my own sole proprietorship firm.

My question is should I have to file form ADT-3 and than ADT-1 form to transfer audit from Partnership firm to my sole proprietorship firm, or filing only form ADT-1 is required.

Further for what period will be ADT-1 filed i.e. for 5 years or for remaining period.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 January 2021 CA firm has to resign first and to e-file form ADT-3. Then, the proprietor has to file e-form ADT-1.

Jatin Bajaj

Jatin Bajaj (Expert)
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23 January 2021 As your firm was the statutory auditor of some of the Companies and now due to change in your constitution, you have to resign from the client Companies and have to file form ADT 3 within 30 days of the resignation and due to your resignation there may be the situation of a casual vacancy in your client Company and in order to fulfil the requirement of a casual vacancy, you would have to file ADT 1 and shall hold the office till upcoming Annual General Meeting and thereafter at Annual general meeting, if Company wishes to appoint, you can be appointed as the statutory auditor of the Company for another period of 5 year
ADT 3- For resignation as firm
ADT 1- Appointing as Casual Vaccancy till AGM
ADT- 1- Appointing as Auditor at AGM for period of five years

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