Is Filing Form ADT-1 Mandatory for First Auditor Appointment?

When it comes to the company law compliance in India, the appointment of auditors is one of the most crucial requirements under the Companies Act, 2013. Auditors ensure that a company’s financial statements present a true and fair view of its financial position and operations.

Businesses are generally aware of the need to file Form ADT-1 for the appointment or reappointment of statutory auditors. However, there has always been confusion around whether filing ADT-1 is mandatory when appointing the first auditor of a company.

This blog will explore a detailed explanation of the issue, covering the legal provisions, recent amendments, practical scenarios and compliance requirements, so that companies and professionals can make well-informed decisions.

Understanding the Appointment of First Auditor

The appointment of the first auditor is governed by Section 139(6) of the Companies Act, 2013. The provision states:

• The Board of Directors shall appoint the first auditor of the company within the duration of 30 days from the date of incorporation.
• If the Board fails to do so, the members of the company must appoint the first auditor within the duration of 90 days at an extraordinary general meeting (EGM). 
• The first auditor so appointed shall hold office till the conclusion of the first Annual General Meeting (AGM) of the company.

This provision applies to all companies, whether public or private, unless specifically exempted.

Appointment of Subsequent Auditors

Once the term of the first auditor ends at the conclusion of the first AGM, the company is required to appoint a statutory auditor for a five-year term under Section 139(1).

This appointment (or reappointment) must be filed with the Registrar of Companies (ROC) through Form ADT-1 within 15 days of the AGM.

Thus, the mandatory filing of ADT-1 for subsequent or regular auditors has always been clear and undisputed.

The Root of the Confusion: First Auditor and ADT-1

The confusion stems from the following:

• Section 139(6) (first auditor appointment) does not explicitly mention filing of ADT-1.
• Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014 specifies that a company shall file ADT-1 for appointments made under Section 139(1), i.e., for auditors appointed at the AGM, not under Section 139(6).

For this reason, the traditional interpretation was:

• No mandatory filing of ADT-1 was required for the first auditor.
• Many companies, however, voluntarily filed ADT-1 even for the first auditor to maintain transparent compliance records and avoid future doubts.

It is important to note here that even after the 2025 amendment, the wording of Rule 4(2) has not been updated to specifically mention Section 139(6). However, since the substituted Form ADT-1 itself now contains an explicit option for “first auditor,” and the MCA system enforces such filing, the practical and legal position is that ADT-1 is mandatory for first auditors as well.

Legal Position Before 14 July 2025

Until mid-2025, the legal and professional consensus was:

1. ADT-1 was not mandatory for first auditors.
2. The appointment was completed through a Board Resolution (or EGM Resolution if the Board failed to appoint within 30 days).
3. These resolutions, along with the auditor’s consent and eligibility certificate, were sufficient proof of compliance.
4. Filing ADT-1 for the first auditor was merely a good governance practice, not a statutory requirement.

This position was supported by the language of Section 139(6) and Rule 4(2).

MCA Amendment in 2025: The Game Changer

The Ministry of Corporate Affairs (MCA) notified the Companies (Audit and Auditors) Amendment Rules, 2025 through G.S.R. 359(E), which came into effect from 14 July 2025.

One of the key changes was the revision of Form ADT-1. The amended form now specifically includes:

• First Auditor appointed by Board
• First Auditor appointed by Members
• First Auditor appointed by C&AG (for Government companies)

This clearly indicates the legislative intent:

Filing of ADT-1 is now mandatory for the first auditor appointment as well.

Current Legal Position (Post 14 July 2025)

With the amendment in force:

• Yes, filing ADT-1 is mandatory even for the first auditor.
• Whether the first auditor is appointed by the Board, by Members at EGM, or by C&AG (in case of government companies), the company must file Form ADT-1 within 15 days of such appointment.
• This ensures that the ROC’s records reflect the details of the company’s first auditor, eliminating earlier ambiguity.

Step-by-Step Process for Appointment of First Auditor (Post-Amendment)

1. Board Meeting for Appointment

• Within the period of 30 days, the Board of Directors must appoint the first auditor.
• A resolution is passed approving the appointment.

2. If the Board Fails

• Members appoint the first auditor at an EGM within 90 days.

3. Documentation Required

• Consent letter from the auditor (as per Section 139 and Rule 4(1)).
• Certificate of eligibility under Section 141 (confirming the auditor is not disqualified).
• Board/EGM Resolution.
• Engagement letter/communication between company and auditor.

4. Filing with ROC

• Form ADT-1 must be filed with the Registrar within 15 days of the appointment.

5. Term of First Auditor

• The first auditor holds office till the conclusion of the first AGM.

Penalties for Non-Compliance

If a company fails to appoint an auditor or file ADT-1:

• The company shall be liable to a fine of ₹25,000 to ₹5,00,000.
• Every officer in default shall be punishable with a fine of ₹10,000 to ₹1,00,000.
• An auditor acting without valid appointment is also liable under Section 147.

Hence, non-compliance can attract significant penalties.

Expert Opinion

• Before 14 July 2025: ADT-1 filing was not mandatory for the first auditor, though considered best practice.
• After 14 July 2025: MCA has clarified its stance via the amended form. Filing ADT-1 for the first auditor is now compulsory.

Most of the professionals strongly recommend for compliance with the new rule to avoid penalties and ensure transparency.

Conclusion

The appointment of the first auditor is a fundamental compliance step for every newly incorporated company.

• Earlier Position (Pre-14 July 2025): Filing ADT-1 was not mandatory for the first auditor, though many companies filed voluntarily as a good governance measure.
• Current Position (Post-14 July 2025): Filing ADT-1 has become mandatory even for the first auditor, as clarified by the MCA through the revised rules and form.

To summarize:

• First Auditor (Section 139(6)) – Appointment by Board/EGM, ADT-1 filing now mandatory (from 14 July 2025).
• Subsequent Auditor (Section 139(1)) – Appointment at AGM for 5 years, ADT-1 filing mandatory.

In short, while earlier ambiguity gave companies some flexibility, the MCA has now drawn a clear line: no auditor appointment, whether first or subsequent is complete without filing ADT-1. Timely compliance not only prevents penalties but also enhances the company’s credibility and governance standards in the eyes of stakeholders. If you are seeking for professional help then content to CRSPL Business Consultants, our experts will guide you.