Appointing a Statutory Auditor and Filing Form ADT-1

Every company in India has to appoint a statutory auditor, and the appointment has to be reported to the Registrar through Form ADT-1. Companies often get the first part right and forget the second. This guide walks through who appoints the auditor, when, and what has to be filed.

The first auditor

For a new company, the Board of Directors appoints the first auditor within 30 days of incorporation. If the Board does not do it, the members can appoint the auditor at an extraordinary general meeting, which has to be called within 90 days. The first auditor stays in office until the end of the first annual general meeting.

Later years: the five-year term

From the first AGM onwards, the members appoint the auditor at the AGM for a term of five consecutive years, up to the conclusion of the sixth AGM. Since the 2017 amendment to the Companies Act, the appointment no longer needs to be ratified at every AGM. The auditor must give a written consent and a certificate that they are eligible and not disqualified under Section 141 before the appointment is made.

Auditor rotation

Companies that fall in certain classes have to rotate their auditors. This covers listed companies, unlisted public companies with paid-up capital of ₹10 crore or more, private companies with paid-up capital of ₹50 crore or more, and any company with bank or public financial institution borrowings of ₹50 crore or more. In these companies an individual auditor can serve one term of five years and an audit firm up to two terms. Most small private companies are outside this rule.

Filing Form ADT-1

The company files Form ADT-1 with the Registrar within 15 days of the meeting at which the auditor was appointed, or within 15 days of the Board’s appointment in case of the first auditor. The form carries the auditor’s details, the period of appointment and a copy of the appointment letter or resolution. Missing the 15-day window means additional fees on the filing.

When the auditor leaves

If an auditor resigns, Form ADT-3 has to be filed, and the company needs to fill the vacancy in time. We have a separate guide on auditor resignation and ADT-3.

How we can help

We handle the appointment resolution, consent letters and the ADT-1 filing, and can also take up the statutory audit itself. For the rest of the yearly filings, see annual compliance filing.