Section 139 — Appointment of auditors

(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:
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Provided further that before such appointment is made, the written conse nt 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:

1. The proviso ins. by Act 1 of 2018, s. 39 (w.e.f. 7-5-2018).
2. The words and figures “within the time specified, under section 403” omitted by s. 39, ibid. (w.e.f. 7-5-2018).
3. Subs. by s. 39, ibid., for “in section 403” (w.e.f. 7-5-2018).
4. Subs. by Act 22 of 2019, s. 22, for “punishable with fine” (w.e.f. 2-11-2018).
5. Subs. by Act 29 of 2020, s. 28, for “one thousand rupees for every day during which the failure continues but which shall not
be more than ten lakh rupees” (w.e.f. 21-12-2020).
6. Subs. by Act 22 of 2019, s. 22, for “punishable with imprisonment for a term which may extend to six months or with fine
which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both” (w.e.f. 2-11-2018).
7. Subs. by Act 29 of 2020, s. 28, for “one lakh rupees” (w.e.f. 21-12-2020).
8. Subs. by s. 28, ibid., for “five lakh rupees” (w.e.f. 21-12-2020).
9. The first proviso omitted by Act 1 of 2018, s. 40 (w.e.f. 7-5-2018).

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.
Explanation.—For the purposes of this Chapter, “appointment” includes re-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 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—
(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:
1[Provided also that every company, existing on or before the commencement of this Act which is
required to comply with the provisions of this sub -section, s hall comply with requirement of this
sub-section within a period which shall not be later than the date of the first annual general meeting of the
company held, within the period specified under sub -section (1) of section 96, after 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).
Explanation.—For the purposes of this Chapter, the word “firm” shall include a l imited liability
partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009).
(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 th e 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.

1. Subs. by notification No. S.O. 2264(E), dated 30th June, 2016, for the proviso (w.e.f.1-4-2014).

(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 thir ty 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, are tiring 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