First Auditor Appointment and Form ADT-1 for Foreign Owned Companies

Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.

Under section 139(6) of the Companies Act, 2013, the board of a new Indian company appoints its first auditor within 30 days of registration. If the board fails, it informs the members, who appoint the auditor at an extraordinary general meeting within 90 days. The first auditor holds office until the first AGM ends. That AGM then appoints an auditor for five years, and the company files Form ADT-1 within 15 days.

This page covers the first auditor of a foreign owned company from the board resolution to the five year term. It also covers ADT-1, eligibility, rotation, casual vacancies, removal and resignation.

When must a new company appoint its first auditor?

The board must appoint the first auditor within 30 days of the date of registration on the Certificate of Incorporation. Section 139(6) of the Companies Act, 2013 sets this limit for every company other than a government company. The first auditor then holds office until the end of the first AGM.

The 30 days run from the date of registration, not from the date the directors receive the certificate. For a company incorporated on 5 Feb 2025, the board must act by 7 Mar 2025. We count the period with the first day left out, which is the usual rule for statutory periods.

Section 173(1) also requires the first board meeting within 30 days of incorporation. So most foreign owned subsidiaries appoint the first auditor at that first meeting. The directors abroad can join by video conference, which our note on board meetings with non resident directors covers.

The board also fixes the first auditor's fee. Section 142(1) leaves remuneration to the general meeting, but its proviso says "the Board may fix remuneration of the first auditor appointed by it". The resolution should state the fee, or authorise a director to agree it in writing.

Step	Who acts	Time limit	Rule
Appoint the first auditor	Board of directors	30 days from the date of registration	Section 139(6)
Fix the first auditor's fee	Board of directors	With the appointment	Proviso to section 142(1)
Appoint if the board fails	Members at an EGM	90 days	Section 139(6)
Hold the first board meeting	Board of directors	30 days from incorporation	Section 173(1)
File the appointment notice	Company	15 days from the appointing meeting	Section 139(1); rule 4(2); Form ADT-1
First auditor's term ends	Not applicable	Conclusion of the first AGM	Section 139(6)

Before the meeting, we collect the auditor's written consent and a certificate of eligibility. A proviso to section 139(1) asks for both on an AGM appointment. Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014 (the Audit Rules) sets what the certificate confirms. We ask for the same papers on a first appointment, because the board must still check section 141.

What happens if the board misses the 30 day deadline?

The board must inform the members, and the members appoint the first auditor at an extraordinary general meeting (EGM) within 90 days. Section 139(6) puts the duty on the members once the board fails. The auditor the EGM appoints also serves until the first AGM ends.

Section 139(6) does not say when the 90 days start. We count them from the end of the board's 30 day window, which is the cautious reading. For a company incorporated on 10 Mar 2025, the board window closed on 9 Apr 2025. The EGM then had to meet by 8 Jul 2025.

A foreign owned subsidiary rarely has a problem calling the EGM. Its members are usually the foreign parent and one nominee. The proviso to section 101(1) allows an EGM at shorter notice with the consent of a majority in number of members entitled to vote. That majority must hold at least 95 percent of the paid up voting capital. Both members sign the consent.

The foreign parent attends through an authorised representative under section 113. Its own board passes a resolution naming that person. We ask for the resolution in advance, because a parent board abroad may meet only once a month.

Missing both windows is a contravention of section 139. Section 147(1) makes the company punishable with a fine of INR 25,000 to INR 5,00,000. Every officer in default faces a fine of INR 10,000 to INR 1,00,000. A late appointment does not erase the breach, so appoint at once.

Who can be the first auditor of a foreign owned company?

Only a Chartered Accountant in practice in India, or a firm whose partners practising in India are mostly Chartered Accountants. Section 141(1) of the Companies Act, 2013 sets this test. A limited liability partnership of Chartered Accountants also qualifies. Only its Chartered Accountant partners may sign for it under section 141(2).

The foreign parent's group auditor cannot sign the Indian report in its own name. Its Indian member firm can act if it passes sections 141 and 144. Our note on whether the parent's global audit firm can audit the Indian subsidiary works through the network rules.

Section 141(3) lists the people who cannot be appointed. Section 141(4) adds that an auditor who becomes disqualified after appointment vacates office.

Disqualification	What it covers	Rule
Body corporate	Any body corporate other than an LLP	Section 141(3)(a)
Officer or employee	An officer or employee of the company, or their partner or employee	Section 141(3)(b) and (c)
Securities or interest	The person, a relative or partner holding securities in the company or its group; a relative may hold up to INR 1,00,000 in face value	Section 141(3)(d)(i); rule 10(1)
Indebtedness	Owing the company or its group more than INR 5,00,000	Section 141(3)(d)(ii); rule 10(2)
Guarantee	Giving a guarantee or security above INR 1,00,000 for a third party's debt to the company or its group	Section 141(3)(d)(iii); rule 10(3)
Business relationship	A business relationship with the company or its group, other than permitted professional services	Section 141(3)(e); rule 10(4)
Relative on the board	A relative who is a director or key managerial personnel	Section 141(3)(f)
Full time job or audit limit	Full time employment elsewhere, or more than twenty company audits	Section 141(3)(g)
Fraud conviction	Convicted of an offence involving fraud, for ten years	Section 141(3)(h)
Section 144 services	Bookkeeping, internal audit and other barred services to the company, its holding or subsidiary company	Section 141(3)(i)

The section 144 test matters most for foreign groups. A subsidiary that wants its auditor to keep its books cannot have both. We run the books under our accounting and bookkeeping service for clients who use another firm as auditor, and the other way round.

The twenty company limit in section 141(3)(g) counts the auditor's own appointments, not the company's. Ask each shortlisted firm to confirm it is within the limit, because the revised ADT-1 asks the company to state it.

How long does the first auditor hold office?

Until the conclusion of the first AGM. Section 139(6) fixes that end point. The length of the first term therefore depends on the first financial year and on when the board calls the first AGM.

Section 2(41) defines the financial year as the year ending 31 March. A company incorporated on or after 1 January closes its first financial year on 31 March of the following year. So a subsidiary incorporated on 5 Feb 2025 had a first financial year from 5 Feb 2025 to 31 Mar 2026.

Section 96(1) lets the first AGM meet within nine months of the end of the first financial year. That company can hold its first AGM as late as 31 Dec 2026. Its first auditor audits a first financial year of almost 14 months and stays in office for almost two years.

The same arithmetic gives a company incorporated on 12 Aug 2025 a first year ending 31 Mar 2026 and a first AGM by 31 Dec 2026. A company incorporated on 15 Jan 2026 closes its first year on 31 Mar 2027. Its first AGM can wait until 31 Dec 2027.

Section 2(41) also has a proviso for a holding company or subsidiary of a company incorporated outside India. It may follow a different year for consolidation abroad, with Central Government approval. Few subsidiaries use it, because Indian tax still runs on a 31 March year. The statutory audit guide for a US subsidiary explains how groups bridge a December year end instead.

How is the auditor appointed for five years at the first AGM?

The members appoint an auditor at the first AGM to hold office until the end of the sixth AGM. Section 139(1) sets this term, which covers five audits. The company may reappoint the first auditor or choose another firm. It files Form ADT-1 within 15 days of the AGM.

The members vote on an ordinary resolution. A private subsidiary has no audit committee under section 177, so the board considers the candidate itself. Rule 3 of the Audit Rules asks the board to weigh the auditor's qualifications and experience against the company's size and needs.

The auditor must give written consent and a certificate before the AGM. Under rule 4(1), the certificate confirms four things:

1. The auditor is eligible and not disqualified under the Act, the Chartered Accountants Act, 1949 and the rules.
2. The proposed appointment follows the term the Act allows.
3. The appointment is within the limits the Act sets.
4. The list of proceedings against the auditor on professional matters is true and correct.

Members no longer ratify the appointment at each AGM. The Companies (Amendment) Act, 2017 omitted the ratification proviso from section 139(1). The Companies (Audit and Auditors) Amendment Rules, 2018 then omitted the proviso to rule 3(7) and the Explanation to rule 3. Rule 3(7) itself still fixes the term at six AGMs. A five year appointment now runs without a yearly vote.

Two rules cover the end of a term. Under section 139(9), the AGM may reappoint a retiring auditor unless one of three things applies:

1. The auditor is disqualified.
2. The auditor has given written notice of unwillingness to continue.
3. The meeting passes a special resolution appointing someone else or barring reappointment.

Section 139(10) adds that if an AGM appoints nobody, "the existing auditor shall continue to be the auditor of the company".

When is Form ADT-1 due, and is it needed for the first auditor?

ADT-1 is due within 15 days of the meeting at which the company appoints the auditor. The fourth proviso to section 139(1) sets that limit, and rule 4(2) of the Audit Rules prescribes the form. For a first auditor appointed by the board, we file ADT-1 within 15 days of the board meeting. The revised form lists that case as its own option.

The legal text is narrower than the form. Section 139(1) ties the 15 day notice to the AGM appointment. Rule 4(2) refers to the notice under the fourth proviso to section 139(1), not to section 139(6). Read alone, the rule does not reach a first auditor appointed by the board.

The Companies (Audit and Auditors) Amendment Rules, 2025 changed the forms, not rule 4(2). G.S.R. 359(E) of 30 May 2025 substituted Forms ADT-1, ADT-2, ADT-3 and ADT-4 from 14 Jul 2025. The new ADT-1 offers these choices for the nature of the appointment:

1. First auditor by the board of directors, members or the Comptroller and Auditor General of India (C&AG).
2. Appointment in an AGM.
3. Reappointment in an AGM.
4. Appointment or reappointment by the C&AG.
5. Appointment in a casual vacancy.
6. Appointment after the non reappointment or removal of the previous auditor.
7. Appointment by the Central Government, appointment by the Tribunal, or another case, which the filer specifies.

We file ADT-1 for every first auditor. It puts the appointment date on the ROC record. The later ADT-3 and ADT-2 forms ask for the SRN of the ADT-1, so they need a filing to point to.

Appointment	Meeting that appoints	ADT-1 due	Our practice
First auditor by the board	Board meeting	Within 15 days of the board meeting	File, using the first auditor option
First auditor by the members	EGM	Within 15 days of the EGM	File, using the first auditor option
Five year auditor at the first AGM	First AGM	Within 15 days of the AGM	File; section 139(1) requires it
Reappointment for a second term	AGM	Within 15 days of the AGM	File; section 139(1) requires it
Casual vacancy, other than a resignation	Board meeting	Within 15 days of the board meeting	File
Casual vacancy after a resignation	Board meeting, then a general meeting	Within 15 days of the meeting	File after the board meeting; check the term after the members approve

The fee follows the company's nominal share capital, which means its authorised capital. The MCA fee schedule under the Companies (Registration Offices and Fees) Rules, 2014 sets INR 200 to INR 600. A late filing pays an additional fee as a multiple of the normal fee, from the table substituted by G.S.R. 12(E) of 11 Jan 2022.

The normal fee is INR 200 below INR 1,00,000 of nominal capital and INR 300 below INR 5,00,000. It is INR 400 below INR 25,00,000, INR 500 below INR 1,00,00,000, and INR 600 from INR 1,00,00,000.

Delay after the due date	Additional fee (multiple of the normal fee)	At a normal fee of INR 600 (INR)
Up to 30 days	2	1,200
More than 30 and up to 60 days	4	2,400
More than 60 and up to 90 days	6	3,600
More than 90 and up to 180 days	10	6,000
Beyond 180 days	12	7,200

What does Form ADT-1 ask for?

ADT-1 asks for the company, the auditor, the term and the type of appointment. An authorised signatory signs it with a Digital Signature Certificate (DSC). The board resolution names the signatory, who may be a director, manager, company secretary, CEO or CFO. Most fields come from the board or AGM resolution and the auditor's consent letter, so we draft the resolution with the form in mind.

The main fields in the form substituted from 14 Jul 2025 are:

1. The company's CIN, name, registered office and email.
2. Whether the company falls in a class covered by rotation under section 139(2).
3. Whether an AGM appointed the auditor, and the AGM date.
4. The date of appointment, and whether there are joint auditors.
5. The auditor's category, firm registration number, membership number, name, PAN and address.
6. The period of account from and to, and the number of financial years covered.
7. Whether the appointment is within the twenty company limit in section 141(3)(g).
8. Whether the board considered the audit committee's recommendation, where one exists.
9. For a casual vacancy, the reason, the date of the vacancy and the related SRN.

The attachments are the company's intimation to the auditor and the auditor's written consent. A resignation letter or a Central Government order goes in where relevant. We add the eligibility certificate and a certified copy of the resolution as optional attachments.

A foreign director can sign ADT-1 with a DSC issued on a passport. Our guide to DIN for foreign directors explains how that director gets a DIN. An Indian resident director or the company secretary often signs instead, which saves a courier of documents abroad.

When does auditor rotation apply to a foreign owned company?

Rotation applies only to listed companies and the classes in rule 5 of the Audit Rules. A private subsidiary enters rotation once its paid up capital reaches INR 50 crore. Public borrowings or deposits of INR 50 crore also bring it in. Most new subsidiaries sit well below those limits. The Rules as first notified in 2014 set the private company limit at INR 20 crore, so older articles show that figure.

Under section 139(2), a company in rotation cannot appoint an individual for more than one term of five consecutive years. It cannot appoint a firm for more than two such terms. After that, the individual or firm waits five years before reappointment.

Company	Rotation applies?	Rule
Listed company	Yes	Section 139(2)
Unlisted public company, paid up capital of INR 10 crore or more	Yes	Rule 5(a)
Private company, paid up capital of INR 50 crore or more	Yes	Rule 5(b), as amended by G.S.R. 621(E) of 22 Jun 2017
Company below those limits, with public borrowings or deposits of INR 50 crore or more	Yes	Rule 5(c)
One person company or small company	No	Rule 5
Private subsidiary below INR 50 crore of paid up capital, with no such borrowings	No	Rule 5

Paid up capital counts face value, not share premium. A foreign parent that funds its subsidiary through equity can cross INR 50 crore in one allotment. We retest rule 5 after every allotment, and our page on increasing paid up capital covers the filings.

A subsidiary of a foreign company can never be a small company. Section 2(85) excludes every holding and subsidiary company. G.S.R. 880(E) of 1 Dec 2025 raised the small company limits to INR 10 crore of paid up capital and INR 100 crore of turnover. That helps a company owned directly by foreign individuals, which can qualify, but not a subsidiary.

Two further limits stop a firm getting round rotation. A proviso to section 139(2) bars, for five years, a firm with a common partner. Rule 6(3) bars an incoming firm from the same network as the outgoing one.

How is a casual vacancy in the office of auditor filled?

The board fills it within 30 days under section 139(8). If the vacancy comes from a resignation, the members must also approve the appointment at a general meeting within three months of the board's recommendation. The new auditor holds office until the end of the next AGM.

A casual vacancy arises when the office falls vacant during a term. The usual causes are:

1. The auditor resigns.
2. An individual auditor dies.
3. The auditor becomes disqualified, and section 141(4) treats the vacation of office as a casual vacancy.
4. An audit firm dissolves.

A vacancy at the end of a term is not casual. The AGM fills it under section 139(1), or the existing auditor continues under section 139(10).

The board resolution should say which kind of vacancy it fills. ADT-1 asks for the reason, the date of the vacancy and the SRN of the outgoing auditor's form. For a resignation, that SRN is the auditor's ADT-3.

We hold the general meeting soon after the board meeting where a resignation caused the vacancy. A foreign parent can consent to short notice, and the meeting can be an EGM. Waiting for the AGM risks missing the three month limit.

How can a company remove its auditor before the term ends?

Only by a special resolution of the members, after the Central Government approves. Section 140(1) also requires a reasonable opportunity of being heard for the auditor. The company applies for approval in Form ADT-2 within 30 days of the board resolution, under rule 7 of the Audit Rules.

The sequence runs in five steps:

1. The board resolves to propose the removal and records the grounds.
2. The company files ADT-2 within 30 days of that board resolution.
3. The company gives the auditor a chance to be heard.
4. The Central Government decides the application.
5. The members pass the special resolution at a general meeting within 60 days of receiving approval.

ADT-2 asks for the grounds for removal and the auditor's appointment details. It also asks whether audit fees are fully paid, whether the auditor gave other services, and the stage of the current audit. Proof of service of the application on the auditor goes with it.

Removal is slow, and a regulator reads the grounds. A disagreement over fees or timelines rarely justifies it. In practice, the company and the auditor usually agree on a resignation instead. The resignation route runs under section 140(2) and section 139(8).

Section 140(5) is a separate power. If the Tribunal finds that an auditor acted fraudulently or colluded in fraud, it may order the company to change its auditor. An auditor against whom a final order is passed cannot audit any company for five years.

How does an auditor resign, and what is Form ADT-3?

The auditor files a statement in Form ADT-3 with the company and the Registrar within 30 days of resigning. Section 140(2) and rule 8 of the Audit Rules set the form. The statement gives the reasons for the resignation and any other relevant facts.

ADT-3 is the auditor's filing, not the company's. The auditor signs it. The form asks for the SRN of the ADT-1 that recorded the appointment, so the company should keep that SRN to hand. The resignation letter is a mandatory attachment.

An auditor who does not file ADT-3 faces a penalty under section 140(3). It is INR 50,000 or the auditor's remuneration, whichever is less. A continuing failure adds INR 500 for each day after the first, up to INR 2,00,000.

For the company, the resignation starts the casual vacancy clock under section 139(8). The board appoints a new auditor within 30 days and files ADT-1. The members then approve the appointment within three months of the board's recommendation.

A new auditor should not accept the role blind. The incoming auditor must write to the outgoing one before accepting. Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 sets that duty. We send the outgoing auditor's ADT-3 and resignation letter to the new firm with our request, which speeds that step.

How does a company replace its auditor at the end of a term?

The members appoint a new auditor at the AGM, after a special notice under section 140(4). Special notice applies when the resolution appoints someone other than the retiring auditor, or bars the retiring auditor's reappointment. It does not apply where the retiring auditor has finished the maximum term under section 139(2).

Section 115 and the Companies (Management and Administration) Rules, 2014 set who can give a special notice and by when. Once it arrives, the company sends a copy to the retiring auditor. The auditor may make a written representation.

The company must tell the members about the representation and send it to them, unless it arrives too late. If the company does not circulate it, the auditor may have it read at the meeting. This gives the outgoing auditor a voice before the members decide.

Situation	Route	Form	Rule
Term ends, company wants a new auditor	Special notice, then AGM resolution	ADT-1 for the new auditor	Sections 139(9), 140(4)
Term ends, retiring auditor unwilling	AGM appoints a new auditor	ADT-1	Section 139(9)(b)
Term ends, no appointment made at the AGM	Existing auditor continues	None until a new appointment	Section 139(10)
Auditor disqualified during the term	Casual vacancy filled by the board	ADT-1	Sections 141(4), 139(8)
Auditor resigns during the term	Board, then members within three months	ADT-3 by the auditor; ADT-1 by the company	Sections 140(2), 139(8)
Company wants to remove the auditor during the term	Special resolution after Central Government approval	ADT-2, then ADT-1	Section 140(1); rule 7

Members use special notice to remove a director as well, which our guide to removal of a director in India explains under section 169.

What are the penalties for getting auditor appointment wrong?

Section 147(1) covers any breach of sections 139 to 146. The company faces a fine of INR 25,000 to INR 5,00,000. Every officer in default faces a fine of INR 10,000 to INR 1,00,000. A late ADT-1 also pays the additional fee under the Fees Rules.

The auditor carries its own exposure under section 147(2). A breach of section 139, 144 or 145 brings a fine of INR 25,000 to INR 5,00,000. If four times the auditor's fee is lower, that is the cap. A knowing or wilful breach with intent to deceive can bring up to one year in prison and a larger fine.

Default	Who is liable	Consequence	Rule
No first auditor appointed by the board or the members	Company; officers in default	Company fine INR 25,000 to INR 5,00,000; officer fine INR 10,000 to INR 1,00,000	Section 147(1)
ADT-1 filed late	Company	Additional fee of 2 to 12 times the normal fee	Fees Rules, as substituted by G.S.R. 12(E)
Auditor appointed in breach of section 141	Company; the auditor	Appointment of an ineligible person is a contravention; fines under section 147	Sections 141, 147
ADT-3 not filed	Auditor	INR 50,000 or the remuneration, whichever is less, plus INR 500 a day, up to INR 2,00,000	Section 140(3)
Auditor breaches sections 139, 144 or 145	Auditor	Fine INR 25,000 to INR 5,00,000, or four times the fee, whichever is less	Section 147(2)

The section 147(1) fines are criminal fines that a court imposes. An offence punishable with fine only can be compounded under section 441. A fine is still a poor outcome for a subsidiary whose parent reports compliance to its own board. Our company compliance service diarises each auditor deadline from the incorporation date.

What changed in 2025 and 2026

We know of no amendment to sections 139 to 141 in force on 23 Oct 2026. The forms changed on 14 Jul 2025, and the small company limits moved on 1 Dec 2025. A Bill to amend the Companies Act, 2013 followed on 23 Mar 2026.

Area	Old position	Position on 23 Oct 2026	Date	Instrument
Forms ADT-1 to ADT-4	2014 forms	Revised forms; ADT-1 has a first auditor option	14 Jul 2025	Companies (Audit and Auditors) Amendment Rules, 2025, G.S.R. 359(E) of 30 May 2025
Rule 4(2) of the Audit Rules	ADT-1 tied to the section 139(1) notice	Unchanged	Not applicable	G.S.R. 359(E) left it as it was
Small company limits	INR 4 crore paid up capital, INR 40 crore turnover	INR 10 crore and INR 100 crore; subsidiaries still excluded	1 Dec 2025	G.S.R. 880(E)
Companies Act, 2013 amendments	Current Act	Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026) introduced and referred to a Joint Committee; not passed	23 Mar 2026	Lok Sabha

We found no record of Parliament passing the Bill by 23 Oct 2026. Until Parliament passes it and the Government notifies it, sections 139 to 147 apply as they stand. Check the Lok Sabha bill status page before you rely on any proposal in it.

Worked example

Delta GmbH, a German company, and its nominee incorporate DeltaTech India Private Limited. The Certificate of Incorporation is dated 5 Feb 2025. Authorised capital is INR 10,00,000. The facts are hypothetical.

The first auditor

1. The board window runs 30 days from 5 Feb 2025, to 7 Mar 2025.
2. The first board meeting is on 20 Feb 2025, by video conference. It appoints an Indian CA firm as first auditor and fixes the fee.
3. ADT-1 falls due within 15 days of 20 Feb 2025, which is 7 Mar 2025.
4. Authorised capital of INR 10,00,000 falls in the INR 400 fee slab.

Suppose the company files ADT-1 on 27 Mar 2025 instead. That is 20 days late, inside the first band. The additional fee is 2 × INR 400 = INR 800. The company pays INR 400 + INR 800 = INR 1,200 in total.

The first AGM and the five year term

DeltaTech was incorporated after 1 Jan 2025, so its first financial year runs from 5 Feb 2025 to 31 Mar 2026. Section 96(1) allows the first AGM up to 31 Dec 2026. The board calls it for 25 Sep 2026.

The AGM reappoints the first auditor until the end of the sixth AGM. That term runs from the end of the first AGM and covers the audits for FY 2026-27 to FY 2030-31. ADT-1 is due within 15 days of 25 Sep 2026, which is 10 Oct 2026.

A resignation in year two

Suppose the auditor resigns on 1 Jul 2027 after a dispute over the audit timetable. The audit fee is INR 3,00,000.

1. The auditor must file ADT-3 by 31 Jul 2027.
2. The board must fill the vacancy within 30 days, by 31 Jul 2027. It appoints a new firm on 14 Jul 2027.
3. ADT-1 is due within 15 days of 14 Jul 2027, by 29 Jul 2027.
4. The members must approve within three months of the board's recommendation, by 14 Oct 2027.

Suppose the outgoing auditor files ADT-3 40 days late. The base penalty is the lower of INR 50,000 and INR 3,00,000, so INR 50,000. The daily part runs for the 39 days after the first: INR 500 × 39 = INR 19,500. The total is INR 50,000 + INR 19,500 = INR 69,500, below the INR 2,00,000 cap.

Common mistakes

1. Leaving the first auditor to the parent's finance team. Fix: put the appointment on the agenda of the first board meeting, inside 30 days of incorporation.
2. Appointing the group's overseas audit firm by name. Fix: appoint the Indian member firm by its Indian name and ICAI firm registration number.
3. Skipping the consent letter and eligibility certificate for the first auditor. Fix: collect both before the board meeting, as for an AGM appointment.
4. Not filing ADT-1 for the first auditor. Fix: file it within 15 days of the board meeting, using the first auditor option in the revised form.
5. Reading the first AGM as the end of the audit relationship. Fix: put the five year appointment and its ADT-1 on the first AGM agenda.
6. Letting the auditor keep the books. Fix: test section 144 before appointment and keep bookkeeping with a different firm.
7. Treating a resignation as closed once the board appoints a successor. Fix: hold the members' meeting within three months of the board's recommendation.
8. Trying to remove an auditor by an ordinary board decision. Fix: follow section 140(1), with ADT-2 and a special resolution, or agree a resignation.
9. Forgetting rotation after a large equity injection. Fix: retest rule 5 of the Audit Rules after each allotment.

Our guide to the statutory audit of a foreign owned Indian subsidiary covers the audit that follows. The compliance calendar for 2026-27 lists the ADT-1, AOC-4 and MGT-7 dates in one place.

Checklist

1. Note the date of registration on the Certificate of Incorporation and diarise day 30.
2. Shortlist Indian CA firms and check each against sections 141 and 144.
3. Obtain the chosen firm's written consent and its eligibility certificate under rule 4(1).
4. Hold the first board meeting within 30 days and appoint the first auditor.
5. Fix the first auditor's fee in the board resolution under the proviso to section 142(1).
6. Send the auditor a written intimation of the appointment.
7. File ADT-1 within 15 days of the board meeting, using the first auditor option.
8. Call an EGM within 90 days if the board missed its 30 day window.
9. Place the five year appointment on the first AGM agenda, with a fresh consent and certificate.
10. File ADT-1 within 15 days of the first AGM.
11. Retest rotation under rule 5 after every allotment of shares.
12. Act within 30 days on any casual vacancy, and seek the members' approval within three months after a resignation.

To have the first auditor and ADT-1 handled with your incorporation, email [email protected] with the incorporation date.

Frequently Asked Questions

Who appoints the first auditor of a company in India?+

The board of directors, within 30 days of the date of registration, under section 139(6) of the Companies Act, 2013. If the board fails, it informs the members. The members then appoint the first auditor at an extraordinary general meeting within 90 days. Government companies follow section 139(7) instead.

What is the time limit for appointing the first auditor?+

Thirty days from the date of registration shown on the Certificate of Incorporation. Section 139(6) sets the limit. For a company incorporated on 5 Feb 2025, the board had to act by 7 Mar 2025. If it misses that date, the members have 90 days at an EGM.

Is Form ADT-1 mandatory for the first auditor?+

The law's text ties ADT-1 to the section 139(1) appointment at an AGM, and rule 4(2) still reads that way. The forms revised from 14 Jul 2025 under G.S.R. 359(E) include a first auditor option. We file ADT-1 for every first auditor, within 15 days of the board meeting.

What is the due date for Form ADT-1?+

Within 15 days of the meeting at which the company appoints the auditor. Section 139(1) sets the limit, and rule 4(2) of the Companies (Audit and Auditors) Rules, 2014 prescribes the form. For an AGM held on 25 Sep 2026, ADT-1 is due by 10 Oct 2026. A late filing pays an additional fee.

What is the fee for filing Form ADT-1?+

The normal fee runs from INR 200 to INR 600, by nominal share capital, under the Companies (Registration Offices and Fees) Rules, 2014. A company with authorised capital of INR 1 crore or more pays INR 600. A late filing pays 2 to 12 times the normal fee as an additional fee.

How long does the first auditor hold office?+

Until the conclusion of the first AGM, under section 139(6). The first AGM can meet up to nine months after the first financial year ends, under section 96(1). A company incorporated on or after 1 January closes its first financial year on 31 March of the next year.

Can the first auditor be reappointed at the first AGM?+

Yes. The members can reappoint the first auditor at the first AGM for a term ending with the sixth AGM, under section 139(1). The auditor gives a fresh written consent and certificate under rule 4(1) of the Audit Rules. The company files ADT-1 within 15 days of the AGM.

Can the foreign parent's auditor be the first auditor of the Indian subsidiary?+

Not in its own name. Section 141(1) allows only a Chartered Accountant in practice in India, or a firm or LLP of such accountants. The parent's network can act through its Indian member firm. That firm must pass section 141 and the section 144 bar on bookkeeping and other services.

Do members still ratify the auditor's appointment every year?+

No. The Companies (Amendment) Act, 2017 omitted the yearly ratification proviso from section 139(1). The Companies (Audit and Auditors) Amendment Rules, 2018 omitted the matching proviso to rule 3(7). A five year appointment made at an AGM now runs without a yearly vote of the members.

Does auditor rotation apply to a foreign owned private company?+

Only once its paid up capital, or its public borrowings or deposits, reach INR 50 crore under rule 5 of the Audit Rules. A company in rotation can keep an audit firm for two terms of five consecutive years. The firm then waits five years under section 139(2).

How is a casual vacancy of the auditor filled?+

The board fills it within 30 days under section 139(8). If a resignation caused the vacancy, the members must approve the appointment at a general meeting within three months of the board's recommendation. The new auditor holds office until the end of the next AGM, and the company files ADT-1.

How can a company remove its statutory auditor?+

By a special resolution of the members, after the Central Government approves, under section 140(1). The company applies in Form ADT-2 within 30 days of the board resolution, under rule 7. The auditor gets a hearing. The members pass the resolution within 60 days of approval.

What is Form ADT-3 and who files it?+

ADT-3 is the resigning auditor's statement of reasons. The auditor files it with the company and the Registrar within 30 days of resigning, under section 140(2) and rule 8. A failure to file costs the auditor INR 50,000 or the fee, whichever is less, plus INR 500 a day, up to INR 2,00,000.

What is the penalty if no auditor is appointed?+

Section 147(1) of the Companies Act, 2013 makes the company punishable with a fine of INR 25,000 to INR 5,00,000. Every officer in default faces a fine of INR 10,000 to INR 1,00,000. The company should still appoint an auditor at once, because the audit cannot start without one.

Can a dormant or small subsidiary skip the auditor appointment?+

No. Section 139 applies to every company, whatever its size or activity. A subsidiary cannot be a small company under section 2(85), and a dormant company under section 455 still needs an auditor. Our batch note on audits for dormant subsidiaries covers that case.

Sources

• Income Tax Department (Companies Act, 2013 text), Section 139, appointment of auditors, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-139-80
• Income Tax Department (Companies Act, 2013 text), Section 140, removal, resignation of auditor and giving of special notice, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-140-79
• Income Tax Department (Companies Act, 2013 text), Section 141, eligibility, qualifications and disqualifications of auditors, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-141-78
• Income Tax Department (Companies Act, 2013 text), Section 142, remuneration of auditors, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-142-80
• Income Tax Department (Companies Act, 2013 text), Section 147, punishment for contravention, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-147-79
• Income Tax Department (Companies Act, 2013 text), Section 2, definitions including clauses 41 and 85, accessed 23 Oct 2026, https://www.incometaxindia.gov.in/w/section-2-148
• High Court of Tripura rules library, Companies (Audit and Auditors) Rules, 2014 as first notified (rules 3 to 8 and 10), accessed 23 Oct 2026, https://thc.nic.in/Central%20Governmental%20Rules/Companies%20(Audit%20and%20Auditors)%20Rules,%202014..pdf
• Ministry of Corporate Affairs, Companies (Audit and Auditors) Amendment Rules, 2025, G.S.R. 359(E) of 30 May 2025, in force 14 Jul 2025, notifications page, https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/notifications.html
• Ministry of Corporate Affairs, G.S.R. 621(E) of 22 Jun 2017 (rule 5 of the Audit Rules), the Companies (Audit and Auditors) Amendment Rules, 2018 (rule 3) and G.S.R. 880(E) of 1 Dec 2025 (small company limits), notifications page, https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/notifications.html
• Lok Sabha, Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026), introduced 23 Mar 2026, bill status page, https://sansad.in/ls/legislation/bills
• Ministry of Corporate Affairs, fee schedule under the Companies (Registration Offices and Fees) Rules, 2014, as amended by G.S.R. 12(E) of 11 Jan 2022, https://www.mca.gov.in/content/mca/global/en/mca/fo-llp-services/enquire-fees.html