As per the new companies act 2013, company is required to inform registrar of companies (ROC) in writing that auditor has been appointed by filling form ADT1 within 15 days from the meeting date in which auditor has been appointed.

However, such requirement is not applicable to the first auditors as these provisions are applicable to the auditors appointed under section 139(1) of the companies act 2013 and first auditors are appointed under section 139(6) of the companies act 2013. This means, filling of form ADT1 is not required for first auditor under companies act 2013.

Yes. As per Section 139(6) of Companies Act, 2013, The First auditor of a company, other than a Government Company, shall be appointed by the BOARD OF DIRECTORS WITHIN THIRTY DAYS OF THE DATE OF INCORPORATION of a company. The auditor so appointed, shall hold office until the conclusion of the first annual general meeting.

Hence it is compulsory to appoint First Auditor in Newly Incorporated Company.

Intimation to ROC is not mandatory in case of First Auditor Appointment under section 139(6) of the Companies Act, 2013. ADT-1 is mandatory is in 139(1) of Companies Act, 2013. 

Thank you for the information of First Auditor Appointment.

Dear Neha,

For first auditor appointment, filing of ADT-1 is optional.

Appointment of first auditor of the company, other than a government company  Sub-section (6) of section 139 of the Act states that: 

Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a government company, shall be appointed by the board of directors within 30 days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within 90 days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.

As per this sub-section, the board has to appoint auditor within 30 days or if the Board fails to appoint, then on 31st day onwards the board’s duty to inform the members about such failure of the board for appointment of first auditor triggers. The members, shall within 90 days from the date of information being sent to them, appoint auditor and such auditor shall hold office till the conclusion of the first annual general meeting.

As stated above, the duty of the Board to inform members about their failure to appoint first auditor, triggers immediately on expiry of the 30 days period whereas the duty of the members of the company to appoint first auditor, triggers immediately on receipt of information of non – appointment by the Board. The members of the company cannot be presumed to be aware of the fact that the first auditor has not been appointed by the Board and in absence of receipt of any information or notice of Extra-ordinary general meeting in this regard, it cannot be said that the shareholders are required to appoint first auditor before expiry of 120 days from the date of registration/ of the company.

The duty or the power of members of the company to appoint first auditor triggers from the date of being informed about such non –appointment by the Board of Directors.   Further, the first auditor or auditors so appointed are to hold office until the conclusion of the first annual general meeting of the company. However, the auditor or auditors so appointed may be removed before the first annual general meeting. For details, see analysis under section 140.

Period for First Auditor for which account need to be Audit :

Example if ABC incorporated on 02.01.2021 then F.Y. will be for the company from 02.01.2021 to 31.03.2022 and in that case auditor tenure will be from the date of Incorporation and hold the office upto the first AGM of the Company for audit for the 1st F.Y. starting from 02.01.2021 to 31.03.2022 (Maximum period 15 months in case of First F.Y.)

As per section 2(41) “financial year”, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:

^33,[²⁸[²⁵ [Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year:

³³,[²⁶[Provided further that]] any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Ordinance, ²⁷[2019], shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement]]]

In terms of section 139(6) of the Companies Act, 2013, first auditors are mandatorily to be appointed within 30 days of incorporation of the company.

 (6) Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a