Complete Guide to ADT 1, ADT 2, and ADT 3: Filing Procedures, Penalties, and Auditor Appointments

Understanding ADT 1: The Appointment of Auditor Form Under the Companies Act, 2013

Form ADT 1 is a crucial document under the Companies Act, 2013, used for appointing an auditor to a company. It must be filed with the Registrar of Companies (RoC) within 15 days from the date of the appointment. This form notifies the RoC about the appointment of the company's auditor, ensuring the company’s compliance with the legal requirements for financial oversight.

The appointment of an auditor is an essential step for any company, as it ensures that the company’s financial records are audited properly. This process applies to both private and public companies. Form ADT 1 must include details like the auditor’s consent, the auditor’s name, and the company’s information. Timely submission of ADT 1 is critical; failure to do so may result in penalties. Thus, understanding and filing ADT 1 correctly is vital for legal compliance and transparency in the company’s financial management.

Step-by-Step Guide on How to File ADT 1 for the First Auditor Appointment

Filing Form ADT 1 for the first auditor appointment is an important process under the Companies Act, 2013. Follow these steps to ensure a smooth filing:

1. Obtain Auditor's Consent: Before filing, ensure that the appointed auditor provides written consent to accept the position. This consent must be included in the filing.
2. Prepare the Required Information: Collect details of the company, including its Corporate Identification Number (CIN), registered address, and the auditor's PAN and membership number.
3. Log in to MCA Portal: Access the Ministry of Corporate Affairs (MCA) website and log in using your credentials.
4. Select ADT 1 Form: Navigate to the e-Forms section, select Form ADT 1, and choose the appropriate filing option for a first-time auditor appointment.
5. Fill Out the Form: Complete the form with accurate details, including the auditor's name, contact information, and the date of the first auditor's appointment.
6. Attach Documents: Attach the auditor's consent letter and any other required documents as instructed.
7. Submit the Form: After verifying all details, submit the form online and pay the required filing fee based on the company’s share capital.
8. Confirmation: Once submitted, the form will be processed by the Registrar of Companies, and you’ll receive a confirmation of filing.
    

Timely and accurate filing of ADT 1 ensures legal compliance and helps avoid penalties under the Companies Act.

Why Timely Filing of ADT 1 is Crucial: Penalties for Late Filing Under the Companies Act

Filing Form ADT 1 within the prescribed timeline is crucial for every company under the Companies Act, 2013. This form must be submitted to the Registrar of Companies (RoC) within 15 days from the date of the first auditor's appointment, as per Section 139 of the Act. Failure to file ADT 1 on time can lead to severe penalties.

Penalties for Late Filing:
If ADT 1 is not filed within the 15-day period, the company faces a penalty of Rs. 200 per day for each day of delay. The total penalty, however, cannot exceed the amount of the company’s defaulting fee, which can increase over time if the filing is delayed further.

Additionally, continuous failure to file within the extended period could lead to other legal consequences. Thus, it is crucial to ensure timely submission to avoid penalties and maintain compliance with the law.

Form ADT 1 for First Auditor: A Comprehensive Overview of the Appointment Process

As per the Companies Act, 2013, every company must appoint its first auditor within 30 days of incorporation. The appointment must be officially reported to the Registrar of Companies (ROC) using Form ADT 1. This form serves as a formal declaration of the auditor's appointment and ensures legal compliance.

Here’s how the process works:

• The Board of Directors appoints the first auditor within 30 days of registration.
• If the Board fails, the members can appoint the auditor at an Extra-Ordinary General Meeting within 90 days.
• After the appointment, the company must file Form ADT 1 with the ROC within 15 days.

Details required in ADT 1 include:

• Company’s CIN
• Auditor’s name, PAN, and membership number
  Date of appointment and board resolution

Timely filing of ADT 1 for first auditor not only ensures compliance but also helps avoid penalties under the Act.

What Happens if ADT 1 is Filed Late? Penalties and Consequences Under the Companies Act

If Form ADT 1 is not filed within the prescribed timeline under the Companies Act, 2013, the company becomes liable for late filing penalties. ADT 1 must be filed within 15 days of appointing the auditor. Failing to do so attracts additional fees, which increase based on the number of days delayed.

Here’s the penalty structure for late filing:

These penalties apply in addition to the normal fee and are to be paid at the time of filing the delayed ADT 1. To avoid such consequences, companies should ensure the timely filing of ADT 1 immediately after the auditor’s appointment.

Form ADT 2: What You Need to Know About the Removal of an Auditor Before Their Term Ends

Form ADT 2 is used by companies when they seek approval from the Central Government for the removal of an auditor before the expiry of their term, as per Section 140(1) of the Companies Act, 2013. The removal of a statutory auditor is not a simple internal decision—it requires a special resolution passed by the company and subsequent approval from the Regional Director (RD) via ADT 2.

Filing Form ADT 2 is mandatory when there are serious reasons such as misconduct, conflict of interest, or breach of duties. It ensures that the removal process is fair, transparent, and governed by law. Companies must file the form within 30 days from the date of passing the board resolution for removal. Failure to comply can result in rejection or delays.

ADT 2 Form Purpose: Understanding Its Role in the Removal of Auditors

The purpose of Form ADT 2 is to maintain accountability and regulatory oversight when a company intends to remove its appointed auditor before their term ends. As per the Companies Act, 2013, an auditor once appointed cannot be removed without prior approval from the Central Government—and that approval request is routed through ADT 2.

This form acts as a formal petition, ensuring the company provides valid grounds for removal. Along with the form, companies must submit details such as the reasons for removal, copy of the board resolution, and details of the concerned auditor. The Registrar of Companies (RoC) and Regional Director will evaluate the application before granting permission.

Using ADT 2 helps prevent arbitrary removals and upholds the integrity of the audit process, making it a critical part of corporate compliance.

How to File ADT 2: A Detailed Procedure for the Removal of an Auditor Before Their Term Ends

Filing Form ADT 2 requires strict adherence to legal steps under the Companies Act, 2013. Here's a simplified step-by-step process:

1. Hold a Board Meeting to propose the removal of the auditor and pass a resolution.
2. Send notice of an EGM (Extraordinary General Meeting) to shareholders with an explanatory statement.
3. Conduct the EGM and pass a special resolution approving the removal.
4. Prepare Form ADT 2 with necessary attachments:
   
   • Certified copy of Board and shareholder resolutions
   • Reasons for auditor removal
   • Auditor’s representation (if any)
5. Submit ADT 2 to the Regional Director (RD) through the MCA portal, within 30 days of the special resolution.
6. Pay the prescribed fee based on the company’s capital.

Once filed, the RD reviews the application and may seek clarifications before giving approval. Timely and accurate filing ensures compliance and avoids penalties or rejection of the application.

Everything You Need to Know About ADT 3: The Auditor Resignation Notification Form

Form ADT 3 is used when an auditor resigns from their position before the completion of their term. Under Section 140(2) of the Companies Act, 2013, it is mandatory for the resigning auditor to file ADT 3 within 30 days from the date of resignation. The purpose of this form is to formally notify the Registrar of Companies (RoC) about the resignation and to maintain transparency in the company’s audit trail.

The form must include:

• The auditor’s reason for resignation
• Date of resignation
• Any remarks the auditor wishes to record

Failure to file ADT 3 on time may lead to penalties for non-compliance. It is an essential compliance step for both the auditor and the company, ensuring proper documentation of changes in statutory auditor appointments.

A Complete Guide to Filing Form ADT 3 for Auditor Resignation

Here is a step-by-step guide to filing Form ADT 3 under the Companies Act, 2013:

1. Prepare a resignation letter and submit it to the company’s board of directors.
2. The company will acknowledge and record the resignation in their next board meeting.
3. The resigning auditor must then file ADT 3 with the MCA (Ministry of Corporate Affairs) through the MCA21 portal.
4. Fill in the required details in the form:
   
   • Auditor’s membership number and firm registration number
   • Company’s CIN (Corporate Identification Number)
   • Reason and date of resignation
   • Any observations or facts relevant to the resignation
5. Digitally sign the form and submit it along with the prescribed fees.

Timely filing of ADT 3 ensures smooth transition and avoids any legal complications or delays in appointing a new auditor.

The Importance of ADT Forms: How ADT-1, ADT-2, and ADT-3 Ensure Legal Compliance for Companies

ADT forms—namely ADT-1, ADT-2, and ADT-3—play a critical role in maintaining statutory compliance for companies under the Companies Act, 2013. These forms help ensure that any changes or decisions regarding auditor appointments, removals, or resignations are properly documented and reported to the Registrar of Companies (RoC).

• Form ADT-1 is filed to report the appointment of auditors—either the first auditor or reappointment after every AGM.
• Form ADT-2 is used to seek approval from the Central Government for the removal of an auditor before their term ends.
• Form ADT-3 must be submitted when an auditor resigns from their position, ensuring transparency.

Timely filing of these forms not only avoids penalties but also strengthens corporate governance by maintaining a clear record of auditor transitions. For companies in India, compliance with ADT forms is not optional—it’s a legal mandate.

FAQs

1. What is ADT 1 and why is it important?

ADT 1 is the appointment of auditor form filed under Section 139 of the Companies Act, 2013. It is used to inform the Registrar of Companies (RoC) about the appointment of an auditor within 15 days of the appointment. Filing Form ADT 1 ensures legal compliance and transparency in the company’s financial oversight.

2. What is the due date for filing ADT 1 for first auditor appointment?

Form ADT 1 for first auditor must be filed within 15 days of the auditor's appointment by the Board of Directors, which itself must happen within 30 days of incorporation. Timely filing is crucial to avoid penalties and legal consequences.

3. How do you file Form ADT 1?

To file ADT 1, log in to the MCA portal, download the form under e-Forms, fill in the details like CIN, auditor’s PAN and membership number, attach the auditor’s consent, and submit with the prescribed fee. For complete steps, refer to the “how to file ADT 1” section of this guide.

4. What is the penalty for late filing of ADT 1?

The penalty for late filing of ADT 1 is ₹200 per day of delay. Additionally, the Companies Act prescribes increased multiples of the normal filing fee based on how many days the form is delayed—ranging from 2x to 12x.

5. What is the purpose of Form ADT 2?

The ADT 2 form purpose is to obtain Central Government approval for the removal of an auditor before the expiry of their term. It ensures the process is legally justified and not arbitrary, as per Section 140(1) of the Companies Act, 2013.

6. When should Form ADT 2 be filed?

Form ADT 2 must be filed within 30 days of passing the board resolution for auditor removal. It should be accompanied by a special resolution passed in a general meeting and supporting documents stating valid reasons for removal.

7. What is Form ADT 3 and who files it?

Form ADT 3 is filed by an auditor who resigns from their post before the end of their term. As per Section 140(2) of the Companies Act, 2013, the auditor must file ADT 3 within 30 days of resignation with the RoC to ensure proper documentation.

8. How do you file Form ADT 3?

To file Form ADT 3, the resigning auditor must log in to the MCA portal, fill out the form with details like CIN, date of resignation, and reason, attach any supporting remarks, sign digitally, and pay the required fee. This ensures compliance with resignation procedures.

9. What happens if ADT 3 is not filed on time?

If ADT 3 is not filed within the 30-day window, the auditor may face penalties and the company may experience compliance issues. It also hampers the process of appointing a new auditor, leading to further delays and legal risks.

10. Can the company remove an auditor without filing ADT 2?

No, a company cannot remove an auditor before the expiry of their term without filing Form ADT 2 and obtaining Central Government approval. Skipping this step violates Section 140(1) and can result in regulatory action.