Appointing and Rotating Your Auditor: ADT-1 and the Companies Act Rules
Every company must appoint a statutory auditor and notify the ROC in Form ADT-1. Here's the appointment timeline, the five-year term, when rotation applies, and the filing deadline.
Every company must appoint a statutory auditor — the first within 30 days of incorporation, and thereafter for a five-year term at the AGM — and notify the ROC in Form ADT-1 within 15 days of the appointment. It's a routine but mandatory corporate filing that founders forget, especially the first appointment after incorporation. Here's the timeline, the term, and when rotation kicks in.
The statutory auditor is mandatory
Regardless of turnover or size, every company must have a statutory auditor — an independent Chartered Accountant who audits the financial statements under the Companies Act (distinct from a tax audit, which is turnover-triggered). No company is exempt from having one.
The appointment timeline
- First auditor: appointed by the board within 30 days of incorporation. If the board doesn't, the members appoint within 90 days.
- Subsequent auditor: appointed at the AGM for a five-year term (subject to ratification/ the current rules).
- ADT-1 filing: notify the ROC of the appointment within 15 days of the AGM (or appointment).
The first-auditor appointment is the one startups miss most — it happens right after incorporation, when the founders are focused on building, and it's easy to overlook alongside INC-20A and the first board meeting.
When rotation applies
Auditor rotation — mandatory rotation of the audit firm after prescribed terms — applies to certain classes of companies (listed companies and specified larger companies by capital/borrowing thresholds). Most small private startups are below the rotation thresholds, so rotation won't apply early — but it's worth knowing it exists as you scale, and confirming your position each term.
Why it matters for diligence
Auditor appointment is part of the corporate-governance record. A reviewer checks that a statutory auditor was validly appointed and the ADT-1 filed — and that the appointment reconciles with your board minutes and ROC filings. A missing first-auditor appointment or unfiled ADT-1 is a small but visible gap.
Track the auditor appointment and its filing
The first auditor within 30 days, then a five-year term with an ADT-1 filing — dates that are easy to miss at incorporation and at each AGM. ComplianceStack tracks the auditor appointment and the ADT-1 as dated tasks with evidence. Get your free compliance health check.
FAQs
- When must a company appoint its first auditor?
- The board appoints the first statutory auditor within 30 days of incorporation (or the members within 90 days if the board doesn't), and files ADT-1.
- What is the auditor's term?
- Subsequent auditors are appointed at the AGM for a five-year term, subject to the current ratification rules.
- When is ADT-1 due?
- Within 15 days of the auditor's appointment (typically after the AGM).
- Does auditor rotation apply to my startup?
- Mandatory rotation applies to listed and specified larger companies by capital/borrowing thresholds. Most small private startups are below the thresholds, but confirm your position each term.
This article is general information, not tax, legal or accounting advice. Statutory timelines and thresholds change by notification — confirm applicability and interpretation with your CA, CS, or lawyer before acting.
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