# Appointment of Auditors — Section 139
## Pre-appointment requirements
Before the auditor is appointed, the proposed auditor must provide:
1. Written consent to act as auditor.
2. A certificate stating that:
- The appointment, if made, will be in accordance with the conditions prescribed under the Act.
- The auditor satisfies the eligibility criteria under Section 141.
- The list of proceedings against the auditor or audit firm (pending or disposed of) is true and complete.
## Intimation to Registrar (ROC)
Once an auditor is appointed, the company must intimate the ROC in Form ADT-1 within 15 days of the meeting in which the appointment is made.
## NFRA Reporting (Rule under Section 132)
- Auditor must file Form NFRA-1 within 15 days of appointment (applicable to specified classes of companies).
- This is a separate filing from ADT-1 and goes to the National Financial Reporting Authority.
## Rotation of Auditors (Section 139(2))
Mandatory rotation applies to:
- Listed companies
- Unlisted public companies with paid-up share capital ≥ ₹10 crore
- Private companies with paid-up share capital ≥ ₹50 crore
- All companies having public borrowings from financial institutions, banks or public deposits ≥ ₹50 crore
Exceptions: OPC and Small Companies are exempt.
## Tenure
- Individual auditor: One term of 5 consecutive years.
- Audit firm: Two terms of 5 consecutive years (i.e., 10 years).
## Cooling-off period
After completion of tenure:
- The auditor (individual/firm) cannot be re-appointed in the same company for 5 years.
### Important clarifications during cooling period
- Q. Can such auditor be appointed as internal auditor of the company during cooling period?
A. Yes.
- Q. Can such auditor be appointed as statutory auditor of the holding/subsidiary company?
A. No.
## Persons also ineligible during cooling period
- Audit firm having common partners with the audit firm whose tenure has just expired.
- Firms operating under the same network of audit firms.
- Firms operating under the same brand name / common control.
- If a partner of audit firm A retires and joins audit firm B which is the proposed auditor of the same entity — firm B is ineligible for 5 years.
## Recommendation by Audit Committee / Board
- Audit Committee (or Board where AC is not required) recommends the name of an individual/firm who may replace the existing auditor on expiry of tenure.
- Board considers the AC's recommendation.
## Transitional Provision (First Proviso)
Period for which an individual/firm has held office as auditor prior to commencement of this Act shall be taken into account for calculating the 5/10 year period.
## Joint Auditors
Where a company has joint auditors, the rotation may be effected in such a manner that all the joint auditors do not retire in the same year.
## Rotation of Audit Partner (Internal Rotation)
Members of a company may resolve that:
- The audit partner and his team shall be rotated at intervals as may be resolved.
- The audit shall be conducted by more than one auditor.
## Re-appointment of Retiring Auditor (Section 139(9))
A retiring auditor may be re-appointed at an AGM if:
1. He is not disqualified for re-appointment.
2. He has not given a written notice of unwillingness to be re-appointed.
3. A Special Resolution has not been passed at that meeting expressly providing that he shall not be re-appointed, or appointing some other auditor in his place.