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13 Sep 2024

Should-E-FORM-ADT-1-be-filed-for-appointment-of-first-auditors

Should-E-FORM-ADT-1-be-filed-for-appointment-of-first-auditors

 Should E-FORM ADT-1 be filed for appointment of first auditors?

APPOINTMENT OF FIRST AUDITOR

According to Section 139(6):

Notwithstanding the provisions of sub-section (1), the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of the company's registration. If the Board fails to appoint the auditor within this period, it must notify the members of the company, who shall then appoint the auditor within ninety days at an extraordinary general meeting. The appointed auditor shall hold office until the conclusion of the first annual general meeting.

 

ADT-1 APPLICABILITY


E-Form ADT-1 must be filed in accordance with Section 139(1) of the Companies Act, 2013, and Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014.

Section 139:

  1. Subject to the provisions of this Chapter, every company shall, at its first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting until the conclusion of its sixth annual general meeting and thereafter until the conclusion of every sixth annual general meeting. The manner and procedure for the selection of auditors by the members of the company at such meetings shall be as prescribed.

    Provided that the company shall place the matter relating to such appointment for ratification by the members at every annual general meeting.

    Provided further that, before such an appointment is made, the written consent of the auditor to such appointment, along with a certificate from him or it stating that the appointment, if made, will comply with the prescribed conditions, shall be obtained from the auditor.

    Provided also that the certificate shall indicate whether the auditor satisfies the criteria provided in Section 141.

    Provided further that the company shall inform the concerned auditor of his or its appointment and file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor is appointed.

Explanation: For the purposes of this Chapter, "appointment" includes reappointment.

Rule 4(2):

4. Conditions for appointment and notice to Registrar. —

  1. The auditor appointed under Rule 3 shall submit a certificate stating that:

(a) The individual or the firm, as applicable, is eligible for appointment and is not disqualified under the Act, the Chartered Accountants Act, 1949, or the rules and regulations made thereunder;

(b) The proposed appointment is in accordance with the terms provided under the Act;

(c) The proposed appointment is within the limits prescribed by or under the authority of the Act;

(d) The list of proceedings against the auditor, the audit firm, or any partner of the audit firm concerning professional matters of conduct, as disclosed in the certificate, is true and correct.

  1. The notice to the Registrar regarding the appointment of an auditor, as required under the fourth proviso to Section 139(1), shall be in Form ADT-1

 

PURPOSE OF THE E-FORM AS PER HELP KIT OF ADT-1

Upon the appointment or reappointment of an auditor at the annual general meeting, the company shall file a notice of such appointment or reappointment with the Registrar within fifteen days of the meeting in which the auditor is appointed or reappointed.

CONCLUSION:

Upon analyzing the above provisions of the Act, it is evident that there is no requirement to file E-Form ADT-1 for the appointment of first auditors. The form is only required to be filed for auditors appointed at general meetings. Therefore, there is no mandatory requirement to file Form ADT-1 for the appointment of first auditors.

However, to maintain a record of the appointment of first auditors, the company may choose to file E-Form ADT-1 voluntarily.

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Article Compiled by:-

~From the desk of CS Sharath 

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.