Section 139 of the Companies Act, 2013
Section 139 of the Companies Act, 2013 deals with the Appointment of Auditors in a company.
Here is a detailed summary:
🔹 Section 139 – Appointment of Auditors
1. Appointment of First Auditor (Section 139(6)):
In case of a company other than a government company:
The Board of Directors must appoint the first auditor within 30 days from the date of registration of the company.
If the Board fails, the members must appoint the auditor within 90 days at an Extraordinary General Meeting (EGM).
In case of a government company:
The Comptroller and Auditor-General of India (CAG) shall appoint the first auditor within 60 days from the date of incorporation.
If the CAG does not appoint within that period, the Board shall appoint the auditor within the next 30 days.
If the Board fails, the company shall appoint the auditor at a general meeting within the next 60 days.
2. Subsequent Appointment (Section 139(1)):
Every company shall appoint an auditor at the first Annual General Meeting (AGM).
The auditor shall hold office from the conclusion of that meeting till the conclusion of the 6th AGM (i.e., for a term of 5 years), subject to ratification at every AGM (Note: The requirement of ratification was removed by the Companies (Amendment) Act, 2017).
3. Reappointment and Rotation (Section 139(2)):
Listed companies and certain prescribed public companies shall not:
Reappoint an individual as auditor for more than one term of five consecutive years, or
Reappoint an audit firm for more than two terms of five consecutive years.
There must be a cooling-off period of 5 years before reappointment of the same auditor/audit firm.
4. Manner and Procedure (Section 139(3) and Rules):
The manner and procedure for selection and appointment of auditors is prescribed under the Companies (Audit and Auditors) Rules, 2014.
5. Filing with ROC:
The company must inform the Registrar of Companies (ROC) of the appointment of the auditor in Form ADT-1 within 15 days of the appointment.
✅ Objective:
To ensure transparency, independence of auditors, and accountability in the audit process of companies.
RELATED Blog
0 comments