The document outlines the requirements and procedures for the appointment of statutory auditors as per the Companies Act, 2013 in India. It details the processes for first-time and subsequent appointments, auditor qualifications, disqualifications, rotation, and the role of the audit committee in these appointments. Additional provisions include the need for e-filing of auditor appointments and distinct regulations for government companies.

1. Appointment of
Statutory Auditor

2. INTRODUCTION
▫ Every Company incorporated under Companies Act, 2013 or any erstwhile Act is required to audit its account
on annual basis, adopt the same at the Annual General Meeting of the Company and file such audited financial
statements with the Registrar.
▫ Auditors are entrusted with huge responsibility present true and fair results, as the financial statement depicts
the actual position of the Company therefore auditor plays vital role in the Company.
▫ Chapter X “Audit and Auditors” of Companies Act, 2013 has explained the process for appointment,
resignation, removal, duties, eligibility and other provisional aspects.
▫ In this PPT we will go through the provisions for appointment of auditors as per Companies Act, 2013 (“Act”).
2

3. APPOINTMENT OF AUDITOR (U/S 139(1) OF ACT)
1. First time Appointment
- By Board within 30 days of Registration till the time of First AGM.
- If Board didn’t appoint then in 90 days members will elect auditor in EGM.
2. Subsequent Appointment
- At 1st AGM till conclusion of 6th AGM & thereafter till conclusion of every 6th AGM
3

4. TERM OF AUDITOR (U/S 139(2) OF ACT)
• Listed Company
• all unlisted public companies having An Individual as Auditor for 1
paid up share capital (PUC) of Rs. 10 crore or more; term of consecutive 5 Year
• all private limited companies having PUC of Rs. 50 crore or more;
• all companies having PUC of below threshold limit An Audit firm as Auditor for
mentioned above, but having public borrowings from 2 term of consecutive 5 Year
financial institutions, banks or public deposits of Rs. 50 crore or more.
An individual auditor who has completed his term of 5 years shall not be eligible for re-appointment as auditor in
the same company for five years from the completion of his term.
An audit firm which has completed its 2 term of 5 years shall not be eligible for re-appointment as auditor in the
same company for five years from the completion of such term.
As per explanation of section 139 (4) of the Act, the word “firm” shall include a LLP incorporated under the LLP Act,
2008.
4

5. PERQUISITES (U/S 139(1) OF ACT)
▫ Written consent of Auditor
▫ Submit certificate that:
- Individual/firm is eligible for appointment and is not disqualified for appointment under the Act, the
Chartered Accountants Act, 1949
- the proposed appointment is as per the term provided under the Act;
- the proposed appointment is within the limits laid down by or under the authority of the Act;
- the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with
respect to professional matters of conduct, as disclosed in the certificate, is true and correct.
▫ Certificate shall also indicate whether the auditor satisfies the criteria provided in section 141 of the Act
5

6. ROTATION OF AUDITOR (U/S 139(3) OF ACT)
Members of the Company may decide to rotate the partner at the general meeting that:
• the auditing partner and his team shall be rotated at such intervals as may be resolved by members
• the audit shall be conducted by more than one auditor.
6

7. QUALIFICATION (U/S 141 OF ACT)
7
• a Chartered Accountant
• a Firm whereof majority of partners practising in India are qualified chartered
accountant, then such Firm
• LLP whose partners are Chartered Accountant

8. DISQUALIFICATION (U/S 139(3) OF ACT)
Any person incurring any of the below given disqualification shall vacate the office and such vacancy will be taken as
casual vacancy.
8
• a body corporate other than LLP;
• an officer or employee of the Company;
• a person who is a partner/in the employment, of an officer/employee of the company;
• a person or a firm who, whether directly or indirectly, has business relationship with the
company,/its subsidiary,/its holding/associate company/subsidiary of such holding company or
associate company;
• a person whose relative is a director/in the employment of the company as a director/ KMP;
• a person who is in full time employment elsewhere or a person or a partner of a firm holding
appointment as its auditor, if such persons or partner is at the date of such appointment or
reappointment holding appointment as auditor of more than twenty companies;
• a person who has been convicted by a court of an offence involving fraud and a period of 10
years has not elapsed from the date of such conviction;
• a person who, directly or indirectly, renders any service referred to in section 144 to the
company or its holding company or its subsidiary company;

9. DISQUALIFICATION (U/S 139(3) OF ACT)
9
• a person who, or his relative or partner:
Is holding Security & Interest in:
• Company
• Subsidiary
• Holding
• Associate
• A Subsidiary of such Holding
Company
Relatives may hold security or
interest in the company of face
value not exceeding one
thousand rupees
Is indebted to:
• Company
• Subsidiary
• Holding
• Associate
• A Subsidiary of such
Holding Company
In excess of rupees five lakh
Has given a guarantee or
provided any security in
connection with the
indebtedness of third person to
• Company
• Subsidiary
• Holding
• Associate
• A Subsidiary of such
Holding Company
In excess of rupees one lakh

10. REAPPOINTMENT
Section 139(9) of the Act states that 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 that meeting appointing some other auditor or providing expressly
that he shall not be re-appointed.
As per section 139(10) of the Act, if 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

11. ROLE OF AUDIT COMMITTEE – AUDITOR APPOINTMENT
As per section 139(10) of the Act, if Company is required to constitute audit committee the appointment/re
appointment of auditor is to be done on recommendation of audit committee.
As per section 177 of the Act, Every audit committee shall:
• recommend for appointment, remuneration and terms of appointment of auditors of the company
• review and monitor the auditor’s independence and performance, and effectiveness of audit process
• examination of the financial statement and the auditors’ report thereon
11

12. E-FILING
As per section 139 of the Act, appointment of auditor shall be intimated to the Registrar within fifteen days of the
meeting in which the auditor is appointed in E Form ADT-1.
Companies are required to adhere to the above said provision while appointing auditor of the Company. Further
these process will amend accordingly for listed companies and companies registered under any other regulatory
bodies like IRDA, RBI.
It is also pertinent to note that these provision are only for non-government companies , for government companies
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,
appointment of auditor is done by Comptroller and Auditor-General of India after following another set of
provisions.
12

13. 13
Any questions?
You can find me at:
╸ www.legaldelight.com
╸ legaldelight21@gmail.com
╸ +91-9311017074