Is Filing of E-Form ADT-1 as per Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014 mandatory in case of appointment of the First Auditor of the Company?
A. Introduction
As per Section 139 of the Companies Act, 2013, the first Auditor shall be appointed in the company by the Board of Directors under Section 139(6) or 139(7) of the Companies Act, 2013.
Section 139(6) of CA, 2013 stated for appointment of the first auditor of a company other than a Government Company, Refer to below.
“Section 139(6)- 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 thirty 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 ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.”
Section 139(7) of CA, 2013 states for appointment of the first auditor for a Government Company, Refer below.
“Section 139(7)- Notwithstanding anything contained in sub-section (1) or sub-section (5), in the case of a Government Company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General of India within sixty days from the date of registration of the company and in case the Comptroller and Auditor-General of India do not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within next thirty days, it shall inform the members of the company who shall appoint such auditor within sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.”
Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014, mentions only about Section 139(1) of the CA, 2013 and not for Section 139(6) & 139 (7) of CA, 2013
“Rule 4(2)- The notice to Registrar about appointment of auditor under fourth proviso to sub- section (1) of section 139 shall be in Form ADT-1.”
B. Conclusion
Post the interpretation of the above-mentioned Sections and Rule, it is pertinent to mention that Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014 stated the filling of Form ADT-1 in the appointment of auditors of the company in Section 139(1) of CA, 2013.
Further, the aforesaid sections 139(6) or 139(7) of CA, 2013 are mentioned nowhere in Rule 4(2) the Companies (Audit and Auditors) Rules, 2014,
Hence Form ADT-1 does not seem mandatory before the ROC at the time of appointment of first auditor of Company under section 139(6) or 139(7) of CA, 2013. Section 139(1) of the CA, 2013 talks about the appointment of auditor other than the first auditor.
However, as part of good practice, Form ADT-1 can also be filed in case of appointment of first auditor.
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