Section 139 - Appointment of Auditors (First, Subsequent, Casual Vacancy)
# Appointment of Auditors under Section 139
Section 139 of the Companies Act, 2013 governs the appointment of auditors. The provisions differ based on the type of company (Normal vs. Government) and the type of appointment (First, Subsequent, or Casual Vacancy).
## 1. Normal Companies (Non-Government)
### (a) First Auditor
Who appoints? Board of Directors (BOD)
Within what time? 30 days from the date of incorporation
If BOD fails? Members shall appoint within 90 days at an Extraordinary General Meeting (EGM)
Tenure: Till the conclusion of the First AGM
### (b) Subsequent Auditor
Who appoints? Members (Shareholders) at the AGM
Tenure: From the conclusion of one AGM till the conclusion of the 6th AGM (i.e., 5 years), subject to ratification (ratification requirement has been removed by the Companies (Amendment) Act, 2017)
### (c) Casual Vacancy
Cause of vacancy other than resignation: Filled by the BOD within 30 days
Cause is resignation: Filled by BOD within 30 days AND approved by members at a General Meeting within 3 months of BOD's recommendation
Tenure: Till the conclusion of the next AGM
## 2. Government Companies / Government-Controlled Entities
### (a) First Auditor
Who appoints? Comptroller and Auditor General of India (C&AG)
Within what time? 60 days from incorporation
If C&AG fails? BOD shall appoint within next 30 days; if BOD also fails, members within 60 days at EGM
Tenure: Till conclusion of the first AGM
### (b) Subsequent Auditor
Who appoints? C&AG within 180 days from commencement of financial year
Tenure: Till conclusion of next AGM
### (c) Casual Vacancy
Who fills? C&AG within 30 days
If C&AG fails? BOD shall fill within next 30 days
## Key Points to Remember
For listed companies and prescribed classes of companies, the BOD must consider the recommendation of the Audit Committee before appointing.
The appointment of subsequent auditor under Section 139(1) is for 5 consecutive years.
Worked example
### Example 1
Example 1: ABC Pvt. Ltd. was incorporated on 1st April 2024. Who shall appoint the first auditor and by when?
Solution: The BOD shall appoint the first auditor within 30 days from the date of incorporation, i.e., by 30th April 2024. If BOD fails, members shall appoint at an EGM within 90 days from incorporation.
### Example 2
Example 2: XYZ Ltd. appointed M/s P & Co. as auditors at AGM held on 30th September 2024 for 5 years. The auditor resigned on 1st March 2025. How will the casual vacancy be filled?
Solution: Since the vacancy is caused by resignation, the BOD shall recommend an auditor within 30 days, and the appointment shall be approved by members at a General Meeting within 3 months of BOD's recommendation. The new auditor will hold office only till the conclusion of the next AGM.
⚠️ Common exam mistakes
Confusing the 30-day BOD timeline with the 90-day member timeline for first auditor appointment.
Forgetting that resignation-based casual vacancies require BOTH BOD recommendation AND member approval at a general meeting within 3 months.
Mixing up Government Company timelines (60 days for C&AG) with normal company timelines (30 days for BOD).
Assuming subsequent auditor's term is renewable automatically — the cooling period under Section 139(2) must be checked.
Bare-Act text Section 139(1), (6), (7), (8) · Companies Act, 2013 · click to expand
Section 139(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...
Section 139(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...
Section 139(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...