First Auditor was not appointed till 9 months

This query is : Resolved

Uday Kumar (Querist)
Follow

03 May 2025 Hello Experts, a private limited company was incorporated on 24.07.2024. However, they approached me as they want me to be appointed as their Statutory Auditor for a term of 5 years from now. However, on seeing their masterdata, I came to know that they didn't appointed First Auditor till today i.e as of 03.05.2025.

Now, my query is, Shall I be appointed as their first auditor till the conclusion of first AGM and later continue as their Statutory Auditor or Shall I be appointed as Statutory Auditor directly for a term of 5 Years from now without appointing myself as first auditor ? What are the Penal Proceedings for not appointing First Auditor of a Company ?

Thanks in Advance.

Uday Kumar

Uday Kumar (Querist)
Follow

15 May 2025 anyone , please reply

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
Follow

12 August 2025 1. Appointment of First Auditor
As per Section 139(6) of the Companies Act, 2013, the first auditor of a company (other than a government company) must be appointed by the Board of Directors within 30 days from the date of incorporation.

If the Board fails to appoint the first auditor within 30 days, then the members (shareholders) must appoint the auditor at the first Annual General Meeting (AGM).

2. Current Situation
The company was incorporated on 24.07.2024.

It is now 03.05.2025, which is well beyond 9 months.

So, first auditor has not been appointed within 30 days, and the first AGM has not yet been held.

3. Can You Be Appointed Directly as Statutory Auditor for 5 Years?
No, you cannot skip the first auditor appointment process.

You must be appointed as the first auditor at the first AGM.

After that, you can be appointed as the statutory auditor for a 5-year term (subject to the company being eligible and complying with Section 139(2)).

4. Penal Proceedings for Non-Appointment of First Auditor
Section 99 of the Companies Act provides for penalties if the company or its officers fail to comply with the appointment of auditors.

The company and every officer who is in default shall be liable to a fine of ₹1,00,000, and a further fine of ₹5,000 for every day during which the default continues.

So, delay can attract penalties and fines.

5. Recommended Action
The Board should call an extraordinary general meeting (EGM) immediately to appoint the first auditor if the first AGM is not due soon.

Alternatively, the first auditor can be appointed at the first AGM.

The company should inform ROC and file necessary e-forms (like ADT-1) for auditor appointment.

You can then be appointed as the first auditor and later be re-appointed for a 5-year term as per law.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now