First auditor
The Board appoints the first auditor within 30 days of incorporation (section 139(6)). If the Board does not, it informs the members, who appoint the auditor within 90 days at an extraordinary general meeting. The first auditor holds office until the end of the first annual general meeting.
Appointment at the AGM
- At the first AGM, the members appoint an auditor to hold office from that meeting until the end of the sixth AGM — a five-year term (section 139(1)).
- Before appointment, the company obtains the auditor's written consent and a certificate that the appointment meets the conditions in section 141.
- The company files Form ADT-1 with the Registrar within 15 days of the meeting.
Rotation
Listed companies and certain other classes must rotate auditors: an individual auditor can serve one term of five years, and an audit firm two terms of five years, followed by a five-year cooling-off period (section 139(2)). The classes covered by rule 5 of the Companies (Audit and Auditors) Rules, 2014 include unlisted public companies with paid-up capital of ₹10 crore or more, private companies with paid-up capital of ₹50 crore or more, and companies with public borrowings or deposits of ₹50 crore or more.
When the auditor resigns
- The resigning auditor files Form ADT-3 with the company and the Registrar within 30 days of resignation, stating the reasons (section 140(2)).
- The Board fills the casual vacancy within 30 days. If the vacancy arises from a resignation, the members must approve the appointment at a general meeting within three months of the Board's recommendation (section 139(8)).
Changing the auditor before the term ends
Removing an auditor before the term ends needs a special resolution and prior approval of the Central Government, applied for in Form ADT-2 (section 140(1)). The auditor must be given a reasonable opportunity of being heard. Appointing a new auditor at the end of a term, when the existing auditor is not re-appointed, follows the special-notice procedure in section 140(4).
What the incoming auditor must do
Before accepting, the incoming auditor must communicate in writing with the previous auditor (Clause 8, Part I of the First Schedule to the Chartered Accountants Act, 1949) and check that the appointment complies with sections 139 to 141, including the limit on the number of company audits a partner can hold.
References
- Companies Act, 2013, sections 139, 140 and 141
- Companies (Audit and Auditors) Rules, 2014, rules 3, 4 and 5
- Chartered Accountants Act, 1949, First Schedule, Part I, Clause (8)
This note is general information on the law as at October 2026. It is not advice for any specific situation.