Section 139 of Companies Act, 2013
Section 139 of Companies Act, 2013 deals with Appointment of auditors.
From the Act
(1) Subject to the provisions of this Chapter, every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as may be prescribed:
Provided that the company shall place the matter relating to such appointment for ratification by members at every annual general meeting:
Provided further that before such appointment is made, the written consent of the auditor to such appointment, and a certificate from him or it that the appointment, if made, shall be in accordance with the conditions as may be prescribed, shall be obtained from the auditor:
Provided also that the certificate shall also indicate whether the auditor satisfies the criteria provided in section 141:
Provided also that the company shall inform the auditor concerned of his or its appointment, and also file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor is appointed.
For the purposes of this Chapter, “appointment” includes reappointment.
(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 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:
(i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term;
(ii) an audit firm which has completed its term under clause (b), shall not be eligible for re-appointment as auditor in the same company for five years from the completion of such term:
Provided further that as on the date of appointment no audit firm having a common partner or 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:
Provided also that every company, existing on or before the commencement of this Act which is required to comply with provisions of this sub-section, shall comply with the requirements of this sub-section within three years from the date of commencement of this Act:
Provided also that, nothing contained in this sub-section shall prejudice the right of the company to remove an auditor or the right of the auditor to resign from such office of the company.
(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; or
(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 sub-section (2).
For the purposes of this Chapter, the word “firm” shall include a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008.
(5) Notwithstanding anything contained in sub-section (1), in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, the Comptroller and Auditor-General of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of one hundred and eighty days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting.
(6) Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.
(7) Notwithstanding anything contained in sub-section (1) or sub-section (5), in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General of India within sixty days from the date of registration of the company and in case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it shall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.
(8) Any casual vacancy in the office of an auditor shall—
(i) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Board of Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting;
(ii) in the 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 thirty days:
Provided that in case the Comptroller and Auditor-General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next thirty days.
(9) Subject to the provisions of sub-section (1) and the rules made thereunder, a retiring auditor may be re-appointed at an annual general meeting, if—
(a) he is not disqualified for re-appointment;
(b) he has not given the company a notice in writing of his unwillingness to be re-appointed; and
(c) a special resolution has not been passed at that meeting appointing some other auditor or providing expressly that he shall not be re-appointed.
(10) 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.
(11) Where a company is required to constitute an Audit Committee under section 177, all appointments, including the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee.
Recent Cases / Related Cases / Case Laws
Related Sections from the Act
- Section 140: Removal, resignation of auditor and giving of special notice
- Section 141: Eligibility, qualifications and disqualifications of auditors
- Section 142: Remuneration of auditors
- Section 143: Powers and duties of auditors and auditing standards
- Section 144: Auditor not to render certain services.
- Section 145: Auditor to sign audit reports, etc
- Section 146: Auditors to attend general meeting
- Section 147: Punishment for contravention.
- Section 148: Central Government to specify audit of items of cost in respect of certain companies
Chapters and Sections from the Act
- Chapter I to VI: Section 1 to Section 87
- Chapter VII: Section 88 to Section 122
- Chapter VIII to X: Section 123 to Section 148
- Chapter XI to XIII: Section 149 to Section 205
- Chapter XIV to XVI: Section 206 to Section 246
- Chapter XVII to XIX: Section 247 to Section 269
- Chapter XX: Section 270 to Section 365
- Chapter XXI to XXVI: Section 366 to Section 406
- Chapter XXVII to XXVIII: Section 407 to Section 446
- Chapter XXIX: Section 447 to Section 470
Other Related Acts
- Companies Act, 1956
- Indian Contract Act, 1872
- Indian Partnership Act, 1932
- Companies (Amendment) Bill, 2014
- Companies (Meetings and Powers of Board) Rules, 2014
- Companies (Declaration and Payment of Dividend) Rules, 2014
- Companies (Audit and Auditors) Rules, 2014
- Companies (Accounts) Rules, 2014
- April 29, 2015: Note on Companies (Amendment) Bill, 2014
- March 10, 2015: Notification of Section 135 of the Companies Act
- July 22, 2014: Changes in Companies Act
- July 18, 2014: Amendment in Companies Act, 1956
- June 12, 2014: Amendment to Rule 6 of the Companies Act
- December 12, 2013: Most Recommendations of The Damodaran Committee Taken Into Account In The Companies Act, 2013
- December 12, 2013: Measures to Prevent and Deal with Occurrence of Frauds
- December 7, 2013: Implementation of the New Company LawCompany Law
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