Statutory Auditor Appointment for Companies — ADT-1 Form and Rules Under Companies Act

Every company incorporated in India (except dormant companies and certain OPCs) must appoint a Chartered Accountant as its statutory auditor. The auditor's primary role is to independently audit the company's financial statements and report to the shareholders. Getting the appointment, tenure and rotation rules right is essential for legal compliance. Here is the complete guide.

Who Must Appoint a Statutory Auditor?

• All private limited companies (unless exempted as small company)
• All public limited companies
• One Person Companies (OPCs) with paid-up capital above ₹50 lakh or annual turnover above ₹2 crore
• LLPs above specified thresholds (see LLP audit requirements)

Small companies (paid-up capital up to ₹4 crore AND turnover up to ₹40 crore) may have lighter audit requirements under the Companies (Auditor's Report) Order (CARO).

Section 139 — Appointment of First Auditor

The first statutory auditor is appointed by the Board of Directors within 30 days of incorporation. If the Board fails to appoint, the shareholders at an EGM (Extraordinary General Meeting) must appoint within 90 days. The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

Subsequent Auditors — Appointment at AGM

After the first auditor, the company's shareholders appoint the statutory auditor at the AGM to hold office from the conclusion of that AGM until the conclusion of the 6th AGM (i.e., for 5 consecutive years). The auditor's appointment must be ratified at every AGM during this period.

Auditor Rotation Rules

Under Section 139(2) of the Companies Act, 2013, auditor rotation is mandatory for:

• Listed companies
• Public companies with paid-up capital ≥ ₹10 crore
• Private companies with paid-up capital ≥ ₹50 crore
• Companies with public borrowings ≥ ₹50 crore from public financial institutions

For these companies, an individual auditor can be appointed for a maximum of 5 consecutive years; an audit firm can be appointed for a maximum of 10 consecutive years. After the maximum term, a cooling-off period of 5 years applies before reappointment.

Form ADT-1 — Intimation to ROC

Within 15 days of the AGM at which an auditor is appointed, the company must file Form ADT-1 with the ROC through the MCA V3 portal. The form requires:

• Name and address of the auditor/firm
• Membership number (for individual CA) or firm registration number
• Date of appointment and period of appointment
• Auditor's written consent and certificate of eligibility

Filing fee for ADT-1 depends on the authorised capital of the company (₹300 to ₹1,200 for most companies). Late filing attracts additional fees and possible penalties.

Eligibility and Disqualification

Only a Chartered Accountant (CA) holding a Certificate of Practice can be appointed as a statutory auditor. An auditor is disqualified if they are: an officer or employee of the company, a relative of the company's directors or key managerial personnel, indebted to the company, or provide other specified services (tax consulting, bookkeeping, etc.) to the same company.

Conclusion

Statutory auditor appointment is a critical annual compliance for Indian companies. Understanding the tenure, rotation rules and ADT-1 filing requirements ensures you stay compliant and avoid ROC penalties. SPOTON provides comprehensive company compliance services in Calicut and across Kerala including auditor appointment management and ADT-1 filing.