In short: Every company needs a statutory auditor. The board appoints the first auditor within 30 days of incorporation. After that, the members appoint the auditor at the AGM for a five-year term. Before appointing, get the auditor's written consent and eligibility certificate. Afterwards, tell the ROC in Form ADT-1 within 15 days of the meeting.
Which resolution do you need?
| Situation | Who appoints | Law | Template |
|---|---|---|---|
| A new company appointing its first auditor | Board, within 30 days of incorporation. The auditor holds office until the end of the first AGM | Section 139(6) | Template 1 |
| Appointing or reappointing an auditor for a five-year term | Members, by ordinary resolution at the AGM | Section 139(1) | Template 2 |
If the board fails to appoint the first auditor in time, the members must do so at an extraordinary general meeting within 90 days. A casual vacancy, for example when an auditor resigns, follows different rules under Section 139(8).
Template 1: board resolution for the first auditor
Appointment of the first statutory auditor
"RESOLVED THAT pursuant to Section 139(6) and other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder, [M/s FIRM NAME], Chartered Accountants (Firm Registration No. [FRN]), who have given their written consent and a certificate of eligibility under Section 141 of the Act, be and are hereby appointed as the first Statutory Auditors of the Company, to hold office until the conclusion of the first Annual General Meeting of the Company, at such remuneration as may be mutually agreed between the Board of Directors and the Auditors.
RESOLVED FURTHER THAT [NAME], Director (DIN: [DIN]), be and is hereby authorised to issue the letter of appointment to the Auditors and to do all such acts as may be necessary to give effect to this resolution."
Template 2: AGM resolution for a five-year term
This goes in the notice of the AGM as an item of ordinary business (see the AGM notice format) and in the minutes of the AGM once passed.
Item No. [__]: Appointment of Statutory Auditors
To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:
"RESOLVED THAT pursuant to Sections 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification or re-enactment thereof for the time being in force), [M/s FIRM NAME], Chartered Accountants (Firm Registration No. [FRN]), who have given their written consent and a certificate that they are eligible for appointment, be and are hereby appointed as the Statutory Auditors of the Company, to hold office from the conclusion of this [__th] Annual General Meeting until the conclusion of the [__th] Annual General Meeting of the Company to be held in the year [YYYY], at such remuneration as may be fixed by the Board of Directors in consultation with the Auditors, plus applicable taxes and out-of-pocket expenses.
RESOLVED FURTHER THAT any Director of the Company be and is hereby authorised to file Form ADT-1 with the Registrar of Companies and to do all such acts, deeds and things as may be necessary to give effect to this resolution."
Before and after the meeting
- Before: get the auditor's written consent and a certificate under Rule 4 of the Companies (Audit and Auditors) Rules, 2014 confirming that they are eligible and within the limits on the number of audits.
- Within 15 days of the meeting that appointed the auditor, the company files Form ADT-1 with the ROC, attaching the resolution, the consent and the eligibility certificate (Section 139(1)).
- Send the auditor a formal appointment letter. The auditor usually confirms acceptance.
- Check that the auditor's details match in the next AOC-4 filing.
Many companies used to appoint for five years and then "ratify" the appointment at each AGM. The yearly ratification requirement was removed by the Companies (Amendment) Act, 2017, so once appointed for five years, the auditor continues for the term. See the full calendar in the annual compliance checklist.
Frequently asked questions
Is ADT-1 required for the first auditor appointed by the board?
Practice varies. Section 139(1) requires ADT-1 for appointments made at the AGM, and many professionals also file it for the first auditor because the MCA form covers that case. Ask your company secretary or auditor which approach your ROC expects.
What is the due date for filing ADT-1?
Within 15 days of the meeting at which the auditor was appointed. For an AGM held on 30 September, that is by 15 October.
Can a company appoint an individual CA instead of a firm?
Yes. A private company can appoint an individual chartered accountant or a firm, including an LLP of chartered accountants. Mandatory rotation of auditors applies only to listed companies and certain larger unlisted companies.