Corporate and Other Laws · Audit and Auditors

Appointment of Auditors and First Auditor (Section 139)

Updated 4 October 2026 · Fact-checked

Under Section 139, the Board appoints the first auditor within 30 days of registration. Members appoint later auditors at the AGM for a term ending at the sixth AGM. Government companies use the CAG. The Board fills casual vacancies within 30 days. To solve, identify the company type, the situation and the matching sub-section.

Understand Appointment of Auditors and First Auditor

A statutory auditor is the independent person who audits a company's accounts for the members. Section 139 of the Companies Act, 2013 tells you who appoints the auditor, when, and for how long. Section 141 tells you who is eligible. Keep the two apart.

The first auditor is the auditor appointed before the company holds its first AGM. For a company that is not a Government company, the Board appoints the first auditor within 30 days of registration. If the Board fails, it must inform the members. The members then appoint the auditor at an extraordinary general meeting within 90 days. This auditor holds office until the conclusion of the first AGM.

After that, the subsequent auditor is appointed by the members at the AGM. The auditor holds office from the conclusion of that AGM until the conclusion of the sixth AGM, and then the same cycle repeats. Before appointment, the company must get the auditor's written consent and a certificate that the appointment meets the prescribed conditions and that the auditor satisfies the Section 141 criteria. After the meeting, the company informs the auditor and files a notice with the Registrar within 15 days. Note that "appointment" includes re-appointment. The old requirement of yearly ratification by members was omitted with effect from 7 May 2018, so you should not write about ratification as a current rule.

Government companies and companies owned or controlled by the Central or State Governments are different. The Comptroller and Auditor-General of India (CAG) appoints their auditors, including the first auditor. For the first auditor, the CAG has 60 days from registration. If the CAG does not appoint within that time, the Board appoints within the next 30 days. If the Board also fails, the members appoint at an EGM within 60 days. A casual vacancy arises when the office falls vacant during the term, for example on resignation or on a disqualification incurred after appointment (Section 141(4) treats vacating office for that reason as a casual vacancy). Section 139(8) says who fills it.

Key rules to remember

Normal term of auditor: Conclusion of AGM at which appointed → conclusion of sixth AGM; Section 139(1). The first appointment is made at the first AGM. The same pattern repeats every sixth meeting.
First auditor (non-Government company): Board: within 30 days of registration. If Board fails: members at EGM within 90 days; Section 139(6). Holds office until the conclusion of the first AGM. On failure, the Board must inform the members.
First auditor (Government company): CAG: within 60 days of registration → Board: next 30 days → members at EGM within 60 days; Section 139(7). Applies to Government companies and companies owned or controlled by the Central or State Governments. Holds office until the first AGM.
Subsequent auditor (Government company): CAG appoints within 180 days from commencement of the financial year; Section 139(5). The auditor holds office until the conclusion of the AGM.
Casual vacancy (non-CAG company): Board fills within 30 days. If caused by resignation: general meeting approval within 3 months of Board's recommendation; Section 139(8)(i). The auditor holds office until the next AGM.
Casual vacancy (CAG-audited company): CAG fills within 30 days. If CAG does not, Board fills within the next 30 days; Section 139(8)(ii).
Before and after appointment: Written consent + certificate before; inform auditor + notice to Registrar within 15 days after; Section 139(1) provisos. The certificate must also say whether the auditor satisfies Section 141 criteria.
Rotation: Individual: max one term of 5 consecutive years. Firm: max two terms of 5 years. Cooling-off: 5 years; Section 139(2). Applies to listed companies and prescribed classes of companies. Studied in detail under rotation.
Re-appointment of retiring auditor: Allowed if not disqualified, has not given written notice of unwillingness, and no special resolution appoints another auditor or bars him; Section 139(9).
No auditor appointed at AGM: Existing auditor continues; Section 139(10).
Audit Committee: All appointments, including casual vacancies, only after considering the Audit Committee's recommendations; Section 139(11). Applies where the company must constitute an Audit Committee under Section 177.

How to solve Appointment of Auditors and First Auditor questions

Use this method for any question on appointment of auditors. Most answers are provision, facts, conclusion.

1Identify the company: Government company (or one owned or controlled by Governments) or any other company. This decides whether the CAG or the Board/members act.
2Identify the stage: first auditor, subsequent auditor at an AGM, or a casual vacancy. Match it to Section 139(6)/(7), 139(1)/(5) or 139(8).
3Write the rule in plain words with its time limits, such as 30 days, 60 days, 90 days or 3 months.
4Apply the facts: check dates, who acted, and whether the deadline was met. Count days carefully from the correct starting point.
5Check the cause of any vacancy. Resignation needs approval at a general meeting. Other causes do not need it.
6Check side conditions: written consent, certificate, notice to Registrar within 15 days, Audit Committee recommendation, and rotation if the company is listed or a prescribed class.
7State a clear conclusion: who appoints, by when, and until when the auditor holds office.

Quickest way: Who, when, until when

When to use it: Use it for MCQs and for the first line of a written answer when time is short.

Ask three things: Who appoints? Within what time? Until which meeting?
First auditor, ordinary company: Board, 30 days, first AGM. Fallback: EGM, 90 days.
First auditor, Government company: CAG, 60 days, then Board 30 days, then EGM 60 days.
Later auditor: members at AGM, until the sixth AGM. Government company: CAG within 180 days, until that AGM.
Casual vacancy: Board within 30 days (CAG for CAG-audited companies). Resignation adds general meeting approval within 3 months.
In MCQs, eliminate options that mix up 30, 60, 90 and 180 days, or that name the wrong appointing authority. In written answers, use three lines: provision, facts, conclusion.
Never leave an MCQ blank. There is no negative marking.

Common mistakes in Appointment of Auditors and First Auditor

Saying members appoint the first auditor in every case.
Students remember that members appoint auditors at the AGM and apply it to the first auditor too.
Fix: The Board appoints the first auditor first. Members step in only if the Board fails, at an EGM within 90 days.
Mixing up the time limits 30, 60, 90 and 180 days.
Section 139 has several sub-sections with similar-looking numbers.
Fix: Tie each number to its sub-section: 30 days Board (first auditor), 60 days CAG (first auditor), 90 days members' EGM, 180 days CAG (subsequent auditor).
Writing that auditors must be ratified by members every year.
Older books and notes still show the ratification proviso.
Fix: That proviso has been omitted with effect from 7 May 2018. The term runs to the sixth AGM without yearly ratification.
Saying every casual vacancy needs members' approval.
Students remember the resignation rule and apply it to all vacancies.
Fix: Only a vacancy caused by resignation needs approval at a general meeting, convened within three months of the Board's recommendation. Other vacancies are filled by the Board within 30 days.
Forgetting that the CAG appoints for Government companies.
Students apply the ordinary-company rule to all companies.
Fix: Check the facts for Government or Government-controlled ownership first. If present, use Sections 139(5), (7) and 139(8)(ii).
Ignoring the procedural steps: consent, certificate and Registrar notice.
Students focus only on who appoints and for how long.
Fix: Add one line: written consent and certificate before appointment, then intimation to the auditor and notice to the Registrar within 15 days of the meeting.

Worked examples

Example 1

X Ltd, a company that is not a Government company, was registered on 10 April 2026. The Board did not appoint the first auditor. Advise on who can appoint the auditor, the time limits, and the tenure.

Show the solution

Provision: under Section 139(6), the Board of a non-Government company appoints the first auditor within 30 days of registration.
Facts: 30 days from 10 April 2026 ends on 10 May 2026. The Board has not appointed anyone, so it has failed.
On such failure, the Board must inform the members of the company.
Section 139(6) then gives the members 90 days to appoint the auditor at an extraordinary general meeting. The section does not state the date from which these 90 days run, so do not fix a precise end date in your answer.
The auditor so appointed holds office until the conclusion of the first annual general meeting.
At the first AGM, the members appoint an auditor under Section 139(1) to hold office from the conclusion of that AGM until the conclusion of the sixth AGM.

Answer: The Board had until 10 May 2026. Since it failed, it must inform the members, who must appoint the first auditor at an EGM within 90 days as per Section 139(6). That auditor holds office until the conclusion of the first AGM.

Example 2

Y Ltd is a public company, not a Government company. Its auditor resigned in the middle of the term. The Board wants to appoint a replacement. Explain the procedure and how long the new auditor holds office.

Show the solution

Provision: a casual vacancy in a company not audited by a CAG-appointed auditor is filled by the Board under Section 139(8)(i).
The Board must act within 30 days.
Because the vacancy arose from resignation, the appointment must also be approved by the company at a general meeting convened within three months of the Board's recommendation.
If Y Ltd must have an Audit Committee under Section 177, the Board must take the Committee's recommendations into account (Section 139(11)).
Before appointing, obtain the new auditor's written consent and the certificate, including confirmation of Section 141 eligibility. After the appointment, inform the auditor and file notice with the Registrar within 15 days of the meeting in which the auditor is appointed.
The new auditor holds office until the conclusion of the next annual general meeting.

Answer: The Board fills the vacancy within 30 days, taking the Audit Committee's recommendations into account. Members must approve at a general meeting within three months of the Board's recommendation, because the cause was resignation. The new auditor holds office until the conclusion of the next AGM.

Exam tips

Start every written answer by naming the sub-section rule and its time limit. Examiners award marks for the provision first.
Always check whether the company is a Government company before you answer. Many case-based questions hide this in one line.
For casual vacancy questions, check the cause. Resignation is the trigger for the extra general meeting approval.
Expect MCQs that test numbers (30, 60, 90, 180 days and 15 days). Revise them as a short list the day before the exam.
Link Section 139 with Section 141 and rotation in your answer only when the facts mention eligibility or tenure. Do not add unrelated content.

Practice questions from Audit and Auditors

Appointment of Auditors and First Auditor in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Appointment of Auditors and First Auditor: frequently asked questions

Who appoints the first auditor of a company?

For a company that is not a Government company, the Board appoints the first auditor within 30 days of registration. If the Board fails, the members appoint at an EGM within 90 days. For a Government company, the CAG appoints within 60 days of registration.

How long does a statutory auditor hold office?

The auditor is appointed at an AGM and holds office from its conclusion until the conclusion of the sixth AGM. The first auditor holds office only until the first AGM. Listed companies and prescribed classes also face rotation limits.

Is ratification of the auditor's appointment at every AGM still required?

No. The proviso requiring ratification at every AGM was omitted with effect from 7 May 2018. The auditor continues for the full term unless removed, resigns or becomes disqualified.

What is the difference between the first auditor and a subsequent auditor?

In a non-Government company, the first auditor is appointed by the Board (or by members at an EGM if the Board fails) and serves until the conclusion of the first AGM. A subsequent auditor is appointed by members at an AGM and serves until the conclusion of the sixth AGM. In a Government company, the CAG appoints the first auditor within 60 days of registration; if the CAG fails, the Board appoints within the next 30 days, and failing that the members appoint at an EGM within 60 days. The CAG appoints the subsequent auditor within 180 days of the start of the financial year, and that auditor holds office until the conclusion of the AGM.

What happens if no auditor is appointed at an AGM?

Under Section 139(10), the existing auditor continues as the auditor of the company. The company cannot be left without an auditor merely because the AGM did not appoint one.