Section: 139 – Appointment of Auditors under Companies Act

  1. Every Company shall at the First Annual General Meeting appoint an Individual or firm as an Auditor who shall hold office from the conclusion of this meeting until the conclusion of sixth Annual general Meeting. Provided that Company shall place the matter relating to such appointment for ratification by members at every Annual General Meeting.

Further provided that before such appointment Company should obtain the written consent from the Auditor and certificate which shall indicate the criteria as mentioned in Section.141. Company shall file the said appointment with the Registrar of Companies in e-Form ADT-1 within 15 days from the date of appointment.

2.  No listed Company or a company belonging to such class or classes of companies as may be prescribed shall appoint or re-appoint:

a. An Individual as an Auditor for more than one term of Five consecutive years. and

b. An Audit firm as auditor for more than two terms of five consecutive years

Provided that an Individual or audit firm who has completed their term as mentioned in Sec. 139(2)(b) shall not be eligible for appointment as auditor in the same Company for five years from the completion of such term. Further provided that no audit firm having a common partner/Partners to the other audit firm, whose tenure has expired in a company immediately preceding the financial year, shall be appointed as auditor of the same company for a period of five years. Every Company existing on or before the commencement of this act, which is required to Comply with this Section shall within three years from the date of commencement of said Act shall comply the provision of this Act.

 3. Subject to the provisions of this Act, members of a company may resolve to provide that:

a. In the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members.

b. The audit shall be conducted by more than one auditor.

4. The central government may by rules, prescribe the manner in which the companies shall rotate their auditors in pursuance of sect. 139(2).

5. Notwithstanding anything contained in Sec. 139(1), the first auditors of the company other than the Government Company shall be appointed by the Board of Directors from the date of registration, in case of the Board to perform the said act they should inform to the members of the Company, who shall within 90 days at an Extra ordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the First Annual General Meeting.

6. In the case of Government Company as mentioned in Sec.139(5) Comptroller and Auditor General of India shall within 60days from the date of registration appoint the Auditor, if they fail to do so, the Board should appoint the Auditor within 30days, if Board is also unable to perform, then members should appoint the Auditors within 60 days atan Extra-Ordinary General Meeting who shall hold office till the conclusion of first annual general meeting.

I. In case of the Company other than Company as mentioned in Sec.135(5) be filled by the Board of Directors within 30days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall be approved by the company at a general meeting convened within 3 months of the recommendation of the Board and he shall hold the office till the conclusion of the next Annual general meeting.

II. In case of a Company whose accounts are subject to audit by an Auditor appointed by the Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India within 30days.

7. Provide if the Comptroller and Auditor General of India doesn’t not fill the vacancy within the said period , the Board shall fill the vacancy within the next 30 days.

 8. Subject to the provisions of Sec. 139(1) and the rules made there under, a retiring auditor may be re-appointed at an annual general meeting, if:

  • He is not disqualified for re-appointment
  • He has not given the company a notice in writing of his unwillingness to be re-appointed; and
  • A special resolution has not been passed at the meeting appointing some other auditor or expressly mentioning that he shall not be re-appointed.

9. Where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the Company. 10. Whereas a Company which is required to form an Audit committee as required under section 177, then all the appointment including appointment of Auditor through Casual vacancy can be made, after taking into account the recommendation of such committee.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

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