Auditor Appointment & Resignation
Every company registered in India must appoint a Statutory Auditor who will audit the company’s financial statements and ensure compliance with accounting standards.
When is Auditor Appointment Required?
- First Auditor
- Appointed by the Board of Directors within 30 days from incorporation.
- If the Board fails, members must appoint within 90 days in an EGM.
- Tenure: Until conclusion of first AGM.
- Subsequent Auditor
- Appointed at the first AGM for a term of 5 years.
- Company must file Form ADT-1 with MCA within 15 days of AGM.
Documents Required for Auditor Appointment
- Board Resolution / Shareholders Resolution.
- Consent letter from the Auditor (in Form 139 as per Companies Act).
- Certificate from Auditor confirming eligibility (not disqualified under Sec. 141).
- Notice of AGM / EGM (if applicable).
Due Date for ADT-1 Filing
- Within 15 days of AGM/Board Resolution.
Example: If AGM held on 30th September 2025, ADT-1 must be filed by 15th October 2025.
Penalties for Non-Filing of ADT-1
- Company Penalty: ₹25,000.
- Officers in Default: ₹5,000 each.
Auditor Resignation (Form ADT-3)
Sometimes, an auditor may resign before completing their term. In such cases, compliance is required both from the Auditor and the Company.
Filing of Auditor Resignation
- By Auditor (ADT-3)
- The Auditor must file Form ADT-3 with MCA within 30 days from the date of resignation.
- Must also state the reason for resignation.
- By Company (ADT-1)
- The Company must appoint a new auditor in the same manner as earlier and file ADT-1 within 15 days of appointment.
Documents Required for Auditor Resignation
- Resignation letter from Auditor.
- Board Resolution accepting resignation.
- Notice of EGM / AGM for appointing new auditor (if required).
- Form ADT-3 (filed by Auditor).
Penalties for Non-Filing of ADT-3
- Auditor Penalty: ₹50,000 or the audit fee, whichever is lower.
Key Takeaways
- ADT-1 → Filed by Company for Auditor Appointment (within 15 days).
- ADT-3 → Filed by Auditor for Resignation (within 30 days).
- Both appointment and resignation must be properly documented with Board/Shareholders resolutions.
The Board of Directors within 30 days of incorporation.
No. ADT-1 is not required for the first auditor, only for subsequent auditors.
5 years, subject to shareholder approval at AGM.
The Auditor must file ADT-3 with MCA.
Yes. Auditor must clearly mention reasons in ADT-3.
Within 30 days of resignation (through Board or EGM).
Yes. But they must file ADT-3 and the company must appoint a replacement.
Yes. Once a new auditor is appointed, ADT-1 must be filed by the company.