The board of a new company must appoint its first statutory auditor within 30 days of the date of registration. If the board fails to, it must tell the members, who then appoint the auditor at an extraordinary general meeting within 90 days. Either way, this first auditor holds office only until the end of the first annual general meeting, where the members appoint an auditor for a full five-year term.
That two-step structure, a short first appointment by the board followed by a long one by the members, is the source of most confusion about first auditors, including the question of whether Form ADT-1 is filed. Both steps are explained below.
Step 1: the board appoints within 30 days
Section 139(6) of the Companies Act, 2013 gives the power to appoint the first auditor of a non-government company to the Board of Directors. In practice it is done at the first board meeting, which must itself be held within 30 days of incorporation, so both deadlines are usually met together.
Before the resolution is passed, the company should have from the proposed auditor:
- a written consent to act as auditor; and
- a certificate that the appointment, if made, will satisfy the conditions in the Act and that the auditor meets the eligibility criteria in section 141.
The auditor must be a chartered accountant in practice, or a firm in which most partners practising in India are chartered accountants. Section 141 rules out, among others, an employee of the company, a person who is indebted to it beyond the permitted limit, a relative of a director in certain cases, and someone with a business relationship with the company.
If you would rather have the appointment papers and filing handled, our ROC compliance support prepares the board resolution, consent and filing for the auditor’s appointment.
If the board misses the 30 days
The Act does not let the board quietly appoint on day 45. Once the 30 days have passed without an appointment, the board must inform the members, and the members appoint the first auditor at an extraordinary general meeting within 90 days. In a two-shareholder company this is not a heavy step, but it needs a proper notice, a meeting and minutes, and the delay will show in the company’s records.
The ADT-1 question
Form ADT-1 is the notice to the Registrar of an auditor’s appointment. Section 139(1) says the company shall file a notice of the appointment “within fifteen days of the meeting in which the auditor is appointed”. That proviso sits in the subsection about appointment at the AGM.
For the first auditor appointed by the board under section 139(6), professionals have taken two views:
- Not required: section 139(6) is a separate provision that starts with “notwithstanding anything contained in sub-section (1)”, and does not itself mention a filing.
- File it anyway: the Explanation to section 139(1) says appointment includes re-appointment, the Registrar’s record otherwise shows no auditor for the first year, and filing ADT-1 within 15 days of the board meeting removes any doubt.
Many companies take the second, cautious approach. Whichever view you follow, record the decision, keep the consent and certificate on file, and confirm the current practice with your CS before the 15 days run out.
Step 2: the five-year appointment at the first AGM
At the first AGM, the members appoint an auditor (an individual or a firm) who holds office from the end of that meeting until the end of the sixth AGM, which in practice is five financial years. The same person who acted as first auditor can be appointed, or the members can choose someone else.
The same consent and eligibility certificate are needed again, and this time the ADT-1 requirement is clear: the company informs the auditor and files ADT-1 within 15 days of the AGM.
For most small private companies the auditor can then be re-appointed for further terms, because the limits on consecutive terms in section 139(2) apply to listed companies and to classes of companies prescribed in the rules. Check whether your company falls into one of those classes as it grows.
What if no one is appointed at an AGM?
Section 139(10) provides that if no auditor is appointed or re-appointed at an AGM, the existing auditor continues. That keeps the company audited, but it is a fallback, not a plan: the minutes should still record the appointment properly at the AGM where the term ends.
Frequently asked questions
Can a director’s relative be the first auditor?
Section 141 restricts appointments involving relatives of directors and others with an interest in the company in specified cases. Ask the proposed auditor to confirm eligibility in the certificate before the board resolution.
Does an OPC also need a first auditor within 30 days?
Yes. An OPC is a company, and section 139(6) applies to every company other than a government company.
Can the first auditor resign before the first AGM?
Yes, but resignation is a regulated process with its own filing by the auditor, and the vacancy must be filled under the casual vacancy rules. Plan the replacement before accepting the resignation.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
