The procedure for appointment of auditors under the Companies Act, 2013 is governed primarily by Sections 139, 141, 173, and 177 along with the Companies (Auditor and Auditors) Rules, 2014. For the first auditor (other than in Government companies), the Board of Directors must appoint a qualified and eligible Chartered Accountant within 30 days of incorporation after obtaining written consent and eligibility confirmation. A Board meeting must be convened with proper notice, and upon passing a resolution, the auditor is formally appointed and informed. Filing of Form ADT-1 with the Registrar of Companies is generally done within 15 days. If the Board fails, members must appoint the auditor within 90 days. Subsequently, at the first AGM, the company appoints an auditor to hold office until the conclusion of the sixth AGM, following due procedures including board recommendation, shareholder approval, and statutory filings.
PROCEDURE FOR APPOINTMENT OF AUDITOR
GOVERNING PROVISIONS UNDER COMPANIES ACT, 2013
APPLICABLE PROVISIONS:
– Section 139 of the Companies Act, 2013
– Section 141 of the Companies Act, 2013
– Companies (Auditor and Auditors) Rules, 2014
– Section 177 of the Companies Act, 2013
– Section 173 of the Companies Act, 2013
PART A: APPOINTMENT OF FIRST AUDITOR AFTER INCORPORATION
The first auditor of the company, other than a Government company, shall be appointed by the Board of directors within 30 days from the date of registration (Incorporation) of the company.
PROCEDURE:
| Sr. No | Steps | Timeline / Date |
| 1. | Selection of Qualified Auditor:
– Select a potential independently practicing Chartered Accountant or Chartered Accountant firm eligible for Statutory audit under Companies Act, 2013. – Send a formal intimation letter seeking their consent to serve as the Statutory auditor of the company. |
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| 2. | Obtain Consent and Eligibility Certificate from an Auditor:
– The company shall obtain the written consent letter from the proposed individual auditor or auditor’s firm expressing their willingness to act as the first auditor and confirming compliance with the eligibility criteria specified under Section 141 of the Companies Act, 2013. |
|
| 3. | Convene a Board Meeting (within 30 days of incorporation):
– Post Consent from an Auditor is obtained; issue a Notice to all the directors as per Section 173 of the Companies Act, 2013. – Conduct a Board meeting and pass a board resolution to appoint the first statutory auditor of the company, fix auditors’ remuneration, and authorize the director or company secretary to take further necessary steps. |
Notice must be sent at least 7 days before the meeting (unless Shorter notice in case of urgent business)
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| 4. | Intimate Auditor of their Appointment:
– Issue an appointment letter on the company’s letterhead to the Statutory auditor. |
|
| 5. | Filing Form ADT-1 with Registrar of Companies:
– The company may file Form ADT-1 with ROC. |
within 15 days of the Board meeting in which the Statutory Auditor was appointed |
NOTE*:- If the Board fails to appoint the First Auditor within 30 days of incorporation, Members must appoint within 90 days at an Extraordinary General Meeting.
PART B: APPOINTMENT OF AUDITOR AT FIRST ANNUAL GENERAL MEETING (AGM)
Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.
PROCEDURE:
| Sr. No | Steps | Timeline / Date |
| 1. | Convene a Board Meeting to call AGM:-
– Issue a Notice to all the directors as per Section 173 of the Companies Act, 2013. – In instances where a company is mandated to establish an Audit Committee in accordance with Section 177 of the Companies Act, 2013, this Committee will be formed to recommend an individual or firm for appointment as the Company’s Auditor to the Board. In other scenarios, the Board itself will evaluate and propose an individual or firm to serve as the Company’s Auditor during a Board Meeting. – Approve a notice for the first AGM. |
At least 7 days before the meeting (Shorter notice in case of urgent business) |
| 2. | Obtain Consent and Eligibility Certificate from an Auditor:
– The company shall obtain the written consent letter from the proposed individual auditor or audit firm expressing their willingness to act as the first auditor and confirming compliance with the eligibility criteria specified under Section 141 of the Companies Act, 2013. |
|
| 3. | Issue notice of AGM:-
– Issue notice of AGM – Pass an Ordinary Resolution for appointment of the auditor who shall hold the office till the conclusion of the sixth AGM. |
At least 21 clear days before the meeting. (Shorter notice can be given with the consent by not less than ninety-five per cent. of the members entitled to vote thereat) for Conduct AGM. |
| 4. | Intimate Auditor of their Appointment:
– Issue an appointment letter on company’s letterhead to the Statutory auditor. |
|
| 5. | Filing Form ADT-1 with Registrar of Companies:
– The company shall file Form ADT-1 with ROC. |
Within 15 days of the AGM in which the Statutory Auditor was appointed. |
**This document is for educational purposes only and does not constitute legal advice.
Author : Ram Kishan , Article Assistant at M/s Ronak Jhuthawat & Co, Practicing Company secretary Call: +91 98874 22212 | Email: compliancerjac@gmail.com
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