ADT-1 Filing for Appointment of Statutory Auditor

Form ADT-1 is a statutory requirement under the Companies Act, 2013, for notifying the Registrar of Companies (ROC) about the appointment of an auditor. It ensures transparency and compliance, maintaining trust among stakeholders and one can simply go and download the ADT-1 from MCA V3 Portal by just paying Rs. 100/- as it is a public document made available.

This guide by CA Manish Mishra provides a step-by-step approach to preparing and filing Form ADT-1 for companies including important provisions under the Companies Act, 2013.

Legal Framework

Section 139: Appointment of Auditors

• First Auditor:

  • For a company (other than a Government company): Must be appointed by the Board of Directors within 30 days of incorporation. If the Board fails, members appoint the auditor in an Extraordinary General Meeting (EGM) within 90 days.
  • For a Government company: The Comptroller and Auditor General of India (CAG) appoints the first auditor within 60 days of incorporation. If CAG fails, the Board appoints within the next 30 days. If the Board fails, members appoint within 60 days.

• Subsequent Auditor:

  • Appointment at the 1st AGM for a term of 5 years, subject to ratification at every AGM (ratification requirement omitted by the Companies (Amendment) Act, 2017).

Section 141: Eligibility and Qualifications

• Eligible Auditors: Only Chartered Accountants (individual or firm) are eligible.
• Disqualifications:
  • A person holding securities in the company.
  • A person indebted to the company for more than ₹1,000 or having a business relationship with the company.
  • A person or firm already providing specific services to the company (e.g., internal audit, bookkeeping).

Section 142: Auditor’s Remuneration

• Fixed by the company in a general meeting or as per the Board's decision.
• Remuneration includes the auditor's fees but excludes reimbursement for out-of-pocket expenses.

Section 139(2): Rotation of Auditors

• Applicable to listed and certain prescribed companies.
• An individual auditor cannot serve for more than 5 years.
• An audit firm cannot serve for more than 2 terms of 5 years.
• A cooling-off period of 5 years applies after rotation.

Section 144: Prohibited Services

Auditors cannot provide specific services to the company or its holding or subsidiary, such as:

• Accounting and bookkeeping services.
• Internal audit.
• Financial information systems design.
• Actuarial, investment, or management services.

Section 139(8): Casual Vacancy

• Filling Casual Vacancy:
  • By the Board within 30 days.
  • If caused by resignation, it must also be approved by the members in a general meeting within 3 months.

Section 140: Removal of Auditors

• Process: Removal requires:
  • Approval of the Board.
  • Prior approval of the Central Government.
  • Special resolution in a general meeting.

Section 147: Penalty for Non-Compliance

• If a company fails to comply with provisions regarding the appointment, penalties may apply to the company and officers in default.

MCA Form ADT-1

Form ADT-1 is used to intimate the MCA about an auditor’s appointment. As per Section 139 of the Companies Act, every company must appoint an auditor within 30 days of incorporation or during the annual general meeting (AGM) for subsequent terms.

Applicability of Form ADT-1

Form ADT-1 applies to:

- Private Companies

- Public Companies

- Section 8 Companies

Exemptions:
Government companies and companies with specific rules under their jurisdiction may have different filing norms.

Importance of Filing Form ADT-1

Filing Form ADT-1 ensures:

- Legal compliance with the Companies Act.

- Transparency in the appointment process.

- Avoidance of penalties or legal issues.

When to File Form ADT-1

• Initial Appointment: Within 30 days of incorporation for the first auditor.
• Subsequent Appointments: Within 15 days after the AGM where the auditor is reappointed.

Documents Required for Form ADT-1 Filing

To file Form ADT-1, ensure the following documents are prepared:

- Board Resolution Copy for auditor appointment.

- Consent Letter from the appointed auditor.

- Certificate of Eligibility under Section 141.

- Notification of AGM Proceedings (if applicable).

Step-by-Step Guide to Prepare Form ADT-1

- Download Form: Access the MCA portal and download the latest version of Form ADT-1.

- Fill Company Details: Input CIN, name, and address.

- Enter Appointment Details: Include auditor’s name, membership number, and firm registration.

- Provide Tenure Details: Specify the appointment period.

- Upload Attachments: Attach required documents in PDF format.

Details to be Included in Form ADT-1

- CIN (Corporate Identification Number): Ensure accuracy for company identification.

- Auditor Details: Membership number, PAN, and firm registration.

- Resolution Details: Date and number of board resolution.

- Auditor’s Appointment Tenure: Specify the financial year and duration of appointment.

How to File Form ADT-1 on the MCA Portal

- Log in to the MCA Portal: Use valid credentials.

- Select ‘e-Forms’ Section: Locate Form ADT-1.

- Fill and Upload: Complete the form and upload all documents.

- Pay the Fees: Calculate and pay the filing fee based on company type.

- Submit Form: Ensure no errors before submission. Save the acknowledgment for records.

Common Mistakes to Avoid While Filing

- Incorrect CIN: Verify the CIN before submission.

- Mismatched Auditor Details: Ensure consistency with official records.

- Late Filing: File within the prescribed timeline to avoid penalties.

- Improper Document Format: Attachments must be in the prescribed PDF format.

Penalties for Non-Filing or Late Filing

Failure to file Form ADT-1 attracts:

- Company Penalty: INR 1,000 per day of delay.

- Director Penalty: Additional fines under Section 450 of the Companies Act.

Role of Professionals in Filing

Company Secretaries (CS) and Chartered Accountants (CA) play a critical role in:

- Ensuring accuracy in form preparation.

- Advising on compliance timelines.

- Representing the company in case of disputes or rectifications.

FAQs on Form ADT-1

- What is the purpose of Form ADT-1?

To inform the ROC about the appointment of an auditor.

- Can Form ADT-1 be filed online?

Yes, it must be filed through the MCA portal.

- Is Form ADT-1 mandatory for private companies?

Yes, all companies except exempted entities must file.

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

INR 1,000 per day of delay.

- Who can sign Form ADT-1?

Authorized directors or professionals like CS and CA can sign.

- What happens if Form ADT-1 is not filed?

The company and directors may face penalties and legal consequences.

Benefits of Timely Filing Form ADT-1

- Avoiding Penalties: Saves costs and legal hassles.

- Building Credibility: Ensures transparency for stakeholders.

- Smooth Audits: Facilitates compliance and internal audits.

GenZCFO Advice

Filing Form ADT-1 is a critical compliance step for companies under the Companies Act, 2013. Timely and accurate filing ensures legal compliance, strengthens corporate governance, and upholds stakeholder trust. Companies should leverage professional assistance and digital tools to streamline the filing process and avoid penalties. Feel free to contact us if you have any queries.