First Auditor of a Company: Who Appoints, by When, and Is ADT-1 Needed?
First auditor of a new company: board appointment within 30 days, the 90-day fallback, consent and eligibility, and whether ADT-1 must be filed.
Every new company must appoint its first statutory auditor within 30 days of incorporation. The board makes the appointment. If it does not, the members must appoint one at an extraordinary general meeting within 90 days. The first auditor holds office until the end of the first annual general meeting, where the members appoint an auditor for five years. The revised Form ADT-1, in use from 14 July 2025, has an option for reporting a first auditor. The law does not yet expressly require it, but the MCA recommends filing it, and so do we.
This is one of the first deadlines a new company misses, usually because the founders are busy with the bank account and GST. This guide sets out the steps, the documents and the points that trip companies up.
The timeline for a new company
| Step | Who | Deadline | Law |
|---|---|---|---|
| Appoint the first auditor | Board of directors | Within 30 days of incorporation | Section 139(6), Companies Act, 2013 |
| If the board fails, appoint at an EGM | Members | Within 90 days of incorporation | Section 139(6) |
| Inform the auditor of the appointment | Company | Promptly after the meeting | Rule 4(2), Companies (Audit and Auditors) Rules, 2014 |
| Report the appointment in ADT-1 | Company | Recommended within 15 days of the meeting | Revised ADT-1 (from 14 July 2025); MCA FAQ |
| Hold office | First auditor | Until the conclusion of the first AGM | Section 139(6) |
| Appoint the subsequent auditor for five years | Members at the first AGM | At the first AGM | Section 139(1) |
Government companies follow a different route: the Comptroller and Auditor-General appoints the first auditor under Section 139(7). The rest of this guide is about ordinary private and public companies.
Before the board meeting: consent and eligibility
The company should have the proposed auditor's written consent and a certificate that the appointment satisfies the eligibility conditions in Section 141 before the board resolves. The auditor must be a chartered accountant in practice, or a firm whose partners are mostly chartered accountants in practice, and must not be disqualified, for example by holding shares in the company, being indebted to it beyond the permitted limit, or being related to a director.
- Written consent of the auditor to act.
- Eligibility certificate stating the appointment is within the Act and the limits on the number of audits.
- Board resolution appointing the auditor until the first AGM and, usually, authorising the board to fix the remuneration.
- Appointment letter from the company to the auditor, and the auditor's acceptance or engagement letter.
Is ADT-1 needed for the first auditor?
Rule 4(2) asks the company to file a notice of appointment with the Registrar within 15 days of the meeting at which the auditor is appointed. Its wording refers to appointments under Section 139(1), which is the AGM appointment, not to the first auditor under Section 139(6). For that reason, many practitioners have long said ADT-1 is not required for a first auditor.
Two things have changed the practical answer. The Companies (Audit and Auditors) Amendment Rules, 2025 substituted Form ADT-1 from 14 July 2025, and the new form includes a nature-of-appointment option for a first auditor appointed by the board, the members or the C&AG. The MCA's FAQ also recommends filing ADT-1 for first auditors. Rule 4(2) itself was not amended, so the filing is recommended rather than expressly required. Our position is to file it within 15 days of the board meeting: it costs little, puts the appointment on the MCA record and avoids questions when the financial statements are filed in AOC-4.
If a first auditor was appointed without an ADT-1 in an earlier year, the MCA FAQ allows a placeholder SRN to be entered in AOC-4. Do not let a missing ADT-1 hold up the annual filing; speak to us about the right entry.
What happens if no first auditor is appointed
- The financial statements for the first year cannot be audited by a validly appointed auditor, which holds up the AGM, AOC-4 and MGT-7.
- Contravention of Section 139 attracts penalties on the company and on officers in default under Section 147.
- Banks, investors and the statutory auditor appointed later will ask for the appointment papers.
If the 30-day window has passed, the members can still appoint within 90 days. If that has passed too, act at once: appoint through the members and regularise the record before the year end. For a wider list of the first deadlines, see the first 180 days after incorporation.
Five mistakes we see
- Treating ADT-1 as the appointment. The appointment is the board resolution; ADT-1 only reports it.
- Appointing for five years at the board meeting. The first auditor holds office only until the first AGM.
- No written consent on file. Get it before the board meets.
- Appointing a relative or shareholder of the company. Check Section 141 before choosing.
- Forgetting the first AGM appointment. The five-year appointment at the first AGM is a separate step, and ADT-1 is required for it.
Frequently asked questions
Q: Who appoints the first auditor of a private limited company?
A: The board of directors, within 30 days of incorporation. If the board does not, the members appoint one at an extraordinary general meeting within 90 days.
Q: Is ADT-1 mandatory for the first auditor?
A: Not expressly. Rule 4(2) refers to appointments under Section 139(1). The revised ADT-1 from 14 July 2025 has a first-auditor option and the MCA's FAQ recommends filing it, so we file it within 15 days of the board meeting.
Q: How long does the first auditor hold office?
A: Until the conclusion of the first annual general meeting, where the members appoint an auditor for a term of five years.
Q: What documents are needed to appoint the first auditor?
A: The auditor's written consent and eligibility certificate, the board resolution, the appointment letter and the auditor's acceptance. Keep them with the statutory records.
Q: Can the first auditor be reappointed at the first AGM?
A: Yes. The same firm can be appointed by the members at the first AGM for five years, subject to eligibility, and that appointment is reported in ADT-1.
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