In continuation of the ongoing MCA21 V3 Series, which has previously explored the radical changes introduced by the MCA21 V3 portal, focusing on how these updates are reshaping corporate compliance. In this session, attention is drawn to a critical development: The recent amendment related to the Appointment of First Auditor, which have significant implications for corporate governance, particularly regarding the Appointment of the first auditor and the filing of Form ADT-1.
The Ministry of Corporate Affairs (MCA) has introduced a key amendment to the Companies (Audit and Auditors) Rules, 2014 through a notification dated 30 May 2025. This change comes into force from 14 July 2025 and mandates the filing of Form ADT‑1 for the appointment of the first auditor of a company.
Background
Under the Companies Act, 2013, the appointment of the first auditor by the Board of Directors is governed by Section 139(6). However, there was no specific requirement to file Form ADT‑1 for such appointments. This resulted in to varied interpretations and inconsistencies in compliance practices.
To streamline the process and to bring uniformity, the MCA has now amended the rules to ensure that all first-time auditor appointments are duly reported through MCA’s e-filing system.
Key Amendment at a Glance
- Form ADT‑1 Filing is now mandatory for reporting the appointment of the first auditor under Section 139(6) of the Companies Act, 2013.
- The requirement applies to companies incorporated on or after 14 July 2025.
- No ADT‑1 filing is required for companies incorporated on or before 13 July 2025, provided their first auditor has already been appointed.
Key Highlights of the Amendment
- Effective Date: The new requirement is effective from 14 July 2025.
- Mandatory Filing of Form ADT‑1: Companies are now required to file Form ADT‑1 with the Registrar of Companies (ROC) for the appointment of the first auditor, appointed under Section 139(6) of the Companies Act, 2013.
- Applicability: This rule applies only to companies that appoint their first auditor on or after 14 July 2025.
- Exemption for Prior Appointments: Companies that have appointed their first auditors on or before 13 July 2025 are not required to file Form ADT‑1 for such appointments. This provides clarity for existing companies.
- Alignment with Digital Compliance: The amendment aligns the process of appointment of first auditor with the MCA’s digital ecosystem and ensures complete documentation from the beginning of a company’s life cycle.
Implications for Companies
- Enhanced Compliance: Companies now need to include ADT‑1 filing as part of their initial compliance checklist immediately after incorporation.
- Professional Advisory Role: Chartered Accountants, Company Secretaries, and compliance professionals must update clients and internal processes to reflect this new requirement.
- Penalties for Non-Compliance: Failure to file Form ADT‑1 in the prescribed timeline may attract late fees and penalties under the Companies Act, 2013.
Applicability – Before and After 14 July 2025
Basis of Incorporation | Requirement to Appoint First Auditor | Filing of Form ADT‑1 Required? |
On or Before 13 July 2025 | As per Section 139(6) – within 30 days of incorporation by the Board | Not Mandatorily required |
On or After 14 July 2025 | As per Section 139(6) – within 30 days of incorporation by the Board | Mandatory filing of ADT‑1 with ROC |
What Has Changed?
Before this amendment, there was no specified needs to file Form ADT‑1 for the appointment of the first auditor, resulting in varied compliance practices. The updated rule removes this confusion and requires e-filing, ensuring all auditor appointments are recorded in MCA’s system from the company’s incorporation.
Consequences of Non-Compliance
Failure to file ADT‑1 within the prescribed time (currently 15 days from the date of appointment) may result in:
- Late filing fees under the Companies Act, 2013
- Penalties imposed by the Registrar of Companies (ROC)
Action Points for Companies and Professionals
- Companies incorporated on or after 14 July 2025 must:
- Appoint the first auditor within 30 days of incorporation (as per Section 139(6))
- File Form ADT‑1 within 15 days of such appointment
- Companies incorporated on or before 13 July 2025:
- Must continue to comply with Section 139(6) for appointment
- Not mandatorily required to file Form ADT‑1 for first auditor appointment under the previous regime
- For auditors appointed on or before 13 July 2025, the SRN (Service Request Number) for the appointment can be referenced as ‘Z99999999’.
- Compliance teams and professionals should:
- Update incorporation checklists
- Advise clients cautiously.
- Oversee filing timelines to avoid penalties
Comparison: Filing of ADT-1 for First Auditor (Before vs After July 14, 2024)
Particulars | Before Amendment (till July 13, 2024) | After Amendment (from July 14, 2024) |
Relevant Rule | Rule 4(2) of Companies (Audit and Auditors) Rules, 2014 | Rule 4(2) as amended |
Applicability of ADT-1 for First Auditor | Not mandatory (Rule only covered Sec 139(1); Sec 139(6) not mentioned) | Mandatory for all companies incorporated on or after July 14, 2024 |
System Acceptance of ADT-1 | Allowed by MCA system voluntarily | Mandatory and expected to be system-enforced |
ICSI Recommendation | Recommended filing of the ADT-1 voluntarily for first auditor | Aligns with the mandatory filing requirement |
SRN Requirement for AOC-4 (if ADT-1 not filed) | Use placeholder Z99999999 if ADT-1 was not filed | Z99999999 not applicable—ADT-1 SRN must be used |
First Auditor Appointment Timeline | Within 30 days of incorporation (Sec 139(6)) | Within 30 days of incorporation (Sec 139(6)) |
ADT-1 Filing Timeline | Not applicable / Voluntary | Likely within 15 days of appointment (as per the general ADT-1 timeline) |
Clarification and Interpretation on MCA FAQ Regarding Filing of Form ADT-1 for First Auditor
Reference: MCA FAQ – Question No. 35
- ADT-1 is not mandatory for the appointment of first auditor. How to file AOC-4 form without ADT-1 SRN?
- Although Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014, only mentions Section 139(1) – appointment of auditors and not Section 139(6) – appointment of the first auditor, it is recommended that companies file Form ADT-1 even for the appointment of the first auditor. In case ADT-1 SRN is not available for first auditor, Z99999999 SRN can be entered.
Professional Interpretation
- Companies Incorporated Before July 14, 2024
- Filing of Form ADT-1 for the appointment of the first auditor under Section 139(6) was not mandatory under Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014.
- However, as per the MCA FAQ, it is highly recommended to file Form ADT-1 for proper governance and regulatory clarity.
- In cases where Form ADT-1 was not filed, companies were permitted to use the placeholder SRN “Z99999999” in Form AOC-4, enabling compliance with the form’s validation requirements.
- Companies Incorporated on or After July 14, 2024
- Following the amendment effective from July 14, 2024, it is now mandatory to file Form ADT-1 for the appointment of the first auditor.
- The amendment aligns the legal requirements with regulatory practice and ensures proper record maintenance with the Registrar of Companies (ROC).
- Accordingly, Z99999999 can no longer be used as a substitute for the ADT-1 SRN.
- The SRN of the duly filed ADT-1 is now a mandatory field in Form AOC-4 and other relevant filings.
Conclusion
This amendment by the MCA strengthen the compliance accountability by ensuring that the appointment of first auditors is transparently recorded through digital filing. For companies incorporated on or after 14 July 2025, both the appointment and ADT‑1 filing are now statutory obligations. Companies and professionals should take note and ensure timely action to remain compliant.
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